Written answer by Ministry of National Development on loan-to-value ratio of first-time homebuyers who obtained HDB housing loan

Sep 9, 2024

Question No: 6537

Question by: Mr Chua Kheng Wee Louis

To ask the Minister for National Development for first-time homebuyers who obtained a HDB housing loan since 30 September 2022, what is the number and percentage of loans that have a loan-to-value ratio of (i) 80 per cent (ii) between 75 and 80 per cent and (iii) less than 75 per cent, broken down by the flat type being financed.

Answer:

Most flat buyers who take HDB housing loans are prudent in their flat purchases, with almost 9 in 10 already having Loan-To-Value (LTV) ratios of below 75% in 2023. They will therefore not be affected by the LTV limit reduction. For those with higher LTV ratios of between 75% and 80%, we have observed that these buyers disproportionately bought larger flat types, and paid higher prices. In 2023, amongst resale flat buyers who took HDB loans:

• About nine in ten with LTV ratios above 75% bought 4-room and larger flats, compared to about seven in ten for those with LTV ratios of 75% and below.

• Depending on the flat type, the median resale buyer with an LTV ratio above 75% paid about $20,000 to $60,000 more than the median resale buyer with LTV ratio of 75% and below who bought the same flat type.

The lowering of LTV limit will therefore encourage more prudent borrowing and dampen demand at the higher end of the market, which should in turn have a knock-on effect of stabilizing the rest of the resale market. History tells us that the property market moves in cycles, and those who buy at higher prices with larger loans are also hardest hit when the market cools. We will monitor the market after these latest moves and will take action if necessary.