DBS

DBS: CEO Piyush Gupta says, mortgage loans may drop sharply this year, in the wake of the latest property cooling measures. Expects the drop to be in the 10 to 20% range. Believes there will be a slowdown because of all three things - higher cost to property, lower loan to valuation ratios and higher debt burden ratios". Notes, rates are still at historic lows, so there will need to balance a lot of money available with low rates, because of all the measures. “It's tough to call how much the slowdown will be.” Analysts also predicted that targeting the banks to make loans more expensive could be on the cards if the latest cooling measures don't work. This could include banning banks from offering low teaser rates or flexible interest rate packages or raising the risk weights for mortgages which will make it more expensive for banks as they will have to set aside more capital for selling home loans. It may be seen as desperate but the MAS is believed to have ruled nothing out, following last Oct’s comment by Deputy PM and Minister for Finance Tharman Shanmugaratnam that, the govt “will do what it takes to cool the market, and avoid a bubble that will eventually hurt borrowers and destabilise our financial system."