Mortgage type acquired

Of the four types of mortgage types available, Fixed Deposit Mortgages has been found to be the most popular, taking up 74.5% of the pie. Interest rates of these mortgages are pegged to a bank’s fixed deposit interest rates. As opposed to the conventional 6 to 12 months fixed deposit rates, 18, 36, 48-month rates are used instead. UOB, DBS, OCBC, Maybank and Standard Chartered Bank are some banks that offer this mortgage type.

Fixed mortgages follows after at 19.5%. Such mortgages still remain widely popular as they offer stability and ease of mind to mortgage applicants. Reason being, the interest rates for this type of mortgage are fixed during the loan’s lock-in period (which varies between 1 to 5 years, depending on the mortgagee).

Unlike a few years back where SIBOR/SOR mortgages were highly popular, the trend seems to have been reversed, as these mortgages now see the lowest take up rates. SIBOR and SOR mortgages take up 3.2% and 2.8% of the pie respectively. One reason could be that these mortgages have floating interest rates which are subjected to foreign exchange rates (such as the USD) or the bank’s rates, thus affecting the confidence of the applicants.

Proportion of applicants with existing properties at the point of application

Contrary to popular belief where most mortgage applicants are assumed to be seasoned property investors and acquirers, 63.7% of applicants analyzed were first-time homebuyers or homeowners who have/intend to decouple (in order to avoid paying ABSD when purchasing more than one properties). This is because cooling measures such as ABSD may have detrimental effects on potential earnings from investments.

In fact, only 15% of applicants who did own property at the point of application, owned more than 1 property.

Age of applicants

Majority of the mortgage applicants analyzed fell within 31-50 years of age, making up 64.6% of the total number of applicants. Most applicants within this age range were found to be home upgraders. As these applicants have stronger financial positions, they usually seek to obtain bank loans despite the higher cash upfront as such loans offer highly attractive interest rates. On the other hand, first time homebuyers are likely to obtain HDB loans as opposed to bank loans, as the former requires lesser cash upfront, among other advantages.

Since the age of an applicant is taken into consideration when loan tenure is calculated, this may be the reason for the lower proportion of applicants between the age of 51 to 60 (25.2%) and above the age of 60 (2%).

Purpose for obtaining mortgages

While several clients seek our help in finding the best mortgage structure for property purchases, refinancing (switching from an existing loan to another with lower a lower interest rate) saw a greater number of clients. A quantitative analysis revealed an increase in the proportion of people refinancing loans, from 58% in 2016 to 60.9% this year.

Changes in the macro environment, such as the rise in the US Fed rate, could have been the cause of the surge.

Type of property mortgage is taken for 

Homebuyers that are looking to get HDB flats often opt for HDB concessionary loans hence, majority of our clients are those who seek mortgages for private condominiums. Non-landed private housing makes up 71.1% of the total mortgages applied for, while landed private housing only accounts for 6.6%. Nevertheless, overall private home sales have seen an increase this year with demand for new property looking buoyant.

Preferred banks

Due to the attractive mortgage bundles offered by Standard Chartered Bank (SCB), they managed to attain 28% of the pie in terms of banks of applicants’ choice. Such bundles include the 1% interest rate for the first year of Fixed Deposit mortgage as well as their MortgageONE SIBOR or MortgageONE Fixed Deposit Rate scheme which are solely for private properties. This unique scheme operates as an interest off-set account where monthly interest on mortgage is reduced by off-setting it with interest from your deposits. Additionally, any excess interest earned is used to reduce your outstanding loan principal.

Despite offering appealing bundles, SCB still falls short of clinching the most market share. Singapore’s local banks – DBS, OCBC and UOB, still remains the top 3 preferred banks. You can also  check out a detailed list of mortgage interest rates.

Other relatively popular banks include Maybank (MB), Bank of China (BoC), Citibank and HSBC.

This article is contributed by The team at Redbrick Mortgage Advisory that 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.