Feb home loans shrink for first time since 2006

Mortgages contracted in Feb 2019 on a net basis to S$203.8b, down from S$204.3b in Jan

Singapore

HOUSING loans in Singapore hit another low in February, with mortgages contracting over the month for the first time since April 2006, preliminary data from the Monetary Authority of SIngapore showed on Friday.

Mortgages booked in February on a net basis came in at S$203.8 billion, falling from S$204.3 billion in January. From a year ago, housing loans in February continued to grow, but at its slowest yet of 1.2 per cent since BT began compiling bank lending data from 1991.

With housing loans making up three quarters of consumer lending, overall consumer loans from a year ago grew at its weakest on BT's record. Consumer loans grew just 0.5 per cent in February from a year ago, to S$264.96 billion, decelerating from 0.8 per cent year-on-year growth in January.

From a month ago, consumer lending contracted for the second straight session, reflecting as well continued weakness in car loans, credit-card lending and share financing.

In a report, Selena Ling, head of treasury research and strategy at OCBC Bank, said: "The private residential housing market is likely to remain subdued in the near-term due to the cooling measures, notwithstanding that market expectations of further US Federal Reserve rate hikes have been largely unwound."

Business lending rose by 0.4 per cent to S$407.4 billion from a month ago. This largely reflected lending to non-bank financial institutions. Lending to this key segment reversed from nine straight months of contraction, as it rose 1.4 per cent in February from a month ago to S$100 billion.

Ms Ling said that during this year's Budget, the government made plans to up the accessibility of loan financing for firms by taking up to 70 per cent of the risk - lifted from the previously limit of 50 per cent - for firms.

"This may provide some support for business bank loans," she said.

The gains in business lending were in part offset by the slight contraction in building and construction loans, which make up the single-largest business lending component. This fell slightly by 0.2 per cent to S$136.4 billion.

All in, bank lending was lifted by 0.2 per cent from a month ago, reversing from a slight contraction in January. Loans through the domestic banking unit - which captures lending in all currencies, but reflects mainly Singapore-dollar lending - stood at S$672.3 billion in February, compared with S$671.2 billion a month ago.

From a year ago, total lending rose 3.3 per cent in February. This was a touch stronger than the 3.2 per cent year-on-year gain posted in January.