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What Type of Mortgages are Singaporeans Getting?

Have you ever wondered what types of mortgages are more popular among Singapore homebuyers? In the infographic below, Redbrick Mortgage Advisory, one of Singapore’s largest mortgage consultancy firm, has condensed insights gained from approximately S$1 billion worth of home loans transacted during the first half of 2017 — to help us better understand the local mortgage market at present.

MORTGAGE PREFERENCES | From the data, fixed deposit mortgages seem to be very popular among Singapore homebuyers, with the majority (74.5%) opting for this mortgage type. A fixed deposit mortgage is where home loan rates are pegged to a bank’s fixed deposit interest rate, as opposed to the other types which use the Board and SIBOR/SOR rates as reference. This type of loan has become increasingly popular in Singapore, especially when SIBOR rates are so closely linked to the U.S. dollar (USD) and are expected to increase due to U.S. economy recovery in the near future.

NUMBER OF PROPERTIES OWNED | The analysis shows that 63.7% of the homebuyers were first-time buyers or decoupled homeowners who intend to buy another property while at the same time, avoid or minimise the ABSD. On the other hand, 30.8% of the applicants own one existing property and only 5.5% own two or more during the point of application.

AGE BREAKDOWN | 64.6% of the mortgage applicants fall within the age bracket of 31-50 and out of which, home upgraders make up a larger proportion of this group. This is because first-time homebuyers purchasing an HDB flat tend to obtain a loan from HDB (instead of commercial banks), which is more ideal for young couples with less ability to pay hefty cash upfront.

GENDER BREAKDOWN | Most mortgage applicants are men (56.8%) instead of women. This could be attributed to the fact that women are usually more conservative investors, or have less purchasing power as compared to single men.

REASONS FOR MORTGAGES | 60.9% of the mortgage applicants are refinancing their existing loan to benefit from a lower interest rate from either another loan package or bank, whereas the remaining are new purchases.

PROPERTY TYPES | As those purchasing HDB flats usually seek loans from HDB, a larger proportion (71.1%) of the applicants are condominium buyers. In contrast, only 22.3% obtained bank loan for HDB purchase and 6.6.% for landed property.

BANKS OF CHOICE | Standard Chartered Bank was the most preferred bank in the first half of this year. 28% of the applicants may have been incentivized by SCB’s 1% interest rate for the first year of Fixed Deposit mortgages, or the Mortgage One scheme which helps you to reduce the monthly interest on your mortgage by offsetting it with the interest from your deposits.

With all these being said, there can be changes in these preferences due to the possibility of changing trends or credit environment in the future!

The team at Redbrick Mortgage Advisory has more than 60 years of banking experience and is proficient in structuring and sourcing for the best financing terms for both residential and commercial real estate in Singapore, Malaysia, USA, UK, Japan, Thailand and Australia.


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