UOB Clarifies Its Home Loans Stand

Source : The Business Times, 13 Aug 2007

We would like to clarify your report, ‘UOB tightens up on home loans in face of dizzy market’ (BT, Aug 9).

Firstly, the article mentioned that ‘UOB has been lending only 80 per cent of a home’s valuation, even though most banks are willing to stump up 90 per cent of the selling price’. This is inaccurate. The bank is a market leader and aligns itself with market practice.

Thus, if any customer submits a loan application for up to 90 per cent of the property’s valuation, whether the bank grants the loan will depend on factors including the creditworthiness of the borrower as well as the merits of the property. The bank would consider the loan application favourably if the borrower meets the bank’s criteria.

Secondly, the article also highlighted that ‘UOB has also decided to put its own cap on valuations, which appear more conservative than the current market prices’. The bank does not have a policy on valuation caps.

Market conditions change very quickly and if there is a valuation cap, adjustments in valuations will have to be made as well. Thus, any cap in valuations will only complicate the loan and approval process.

The article also incorrectly quoted Eddie Khoo, UOB’s executive vice-president, personal financial services, as having said ‘we require a higher cash portion’. He did not make such a comment.

He was also quoted as having said that ‘more than 80 per cent of UOB’s home loans were for owner occupation and that foreigners accounted for 20 per cent of home loan customers’. This is inaccurate. He said foreigners account for 10 per cent of home loans.

For the record, UOB grew its Singapore home loans book by 15 per cent for the 12 months ending June 30 2007, outpacing the industry average.

Kevin Lam
Head, Loans Division
United Overseas Bank