Property-Related Loans Still Growing

Source : The Business Times, February 1, 2008

LOCAL bank lending related to property shows no sign of abating despite an impending US recession and associated slowdown of the Singapore economy.

Total property-related loans, which include housing loans and lending to building and construction businesses, was 3.2 per cent higher in December than the previous month, reaching $110.7 billion, according to preliminary data released by the Monetary Authority of Singapore (MAS) yesterday.

On a yearly basis, property-related loans were up 23.4 per cent from Dec 2006's figure of $89.7 billion.

These loans constituted the main bulk of banks' lending business here, boosting total loans and advances to $233.4 billion in December last year. This figure is 20 per cent higher than in December 2006.

Loans grew despite measures undertaken by the government to cool the property sector. Last October, the government unexpectedly removed the deferred payment scheme for homebuyers, in an apparent bid to curb speculation.

Lending to building and construction firms jumped 42.6 per cent from a year ago to $37.5 billion. On a monthly basis, the loans were up 8.7 per cent.

December also saw loans to homebuyers reach $73.1 billion, or 15 per cent higher than a year ago, and 0.6 per cent up month-on- month.

Generally, loans to most business segments went up, except loans to sectors such as agriculture, mining and quarrying, manufacturing and business services.

Borrowing by business services companies has been on a downtrend since last November. It surged to $5.3 billion in October, then dropped 12 per cent to $4.7 billion in November and by a further 2 per cent in December.

Meanwhile, housing loans were the biggest component of bank lending to consumers. Lending to other segments like share financing and credit cards also continued to grow, although these accounted for only about 7 per cent of total consumer lending.

The number of credit cards in circulation, including supplementary cards, shrank marginally by 0.5 per cent over the month to 5.7 million at end-December. But the total credit card rollover balance - that portion of the credit card debt that is subject to interest charges - went up over the month to $3.02 billion, from $2.99 billion.

Overall, month-on month, and on a yearly basis, loans to businesses grew at a faster pace than loans to consumers. Monthly, loans to businesses rose 5 per cent to $127.8 billion, while consumer loans grew only 0.6 per cent to $105.6 billion.

Year-on-year, business loans grew 26.3 per cent while consumer loans expanded 13.1 per cent.