Housing loans extend drop in May but overall lending rises on business loans: MAS data

Singapore

UNSURPRISINGLY, housing loans in Singapore shrank for the fifth straight month in May. At S$202.54 billion, this is a 13-month low as cooling measures continue to work their way through the property market. Preliminary data from the Monetary Authority of Singapore (MAS) released on Friday shows that mortgages booked in May were 0.1 per cent and 0.3 per cent lower month-on-month and year-on-year respectively. The local property market has seen demand and sentiment tempered by the cooling measures put in place last July.

And there may be no respite soon as MAS managing director Ravi Menon said on Thursday that the curbs will not be lifted in the near future, because "there seems to be a good balance that is holding up the market in a good place".

DBS equity research analyst Lim Rui Wen said that a deep contraction in the mortgage book is not expected unless there is an accelerated slowdown in the economy with massive unemployment.

On the back of weaker housing loans, total consumer lending also declined - 0.3 per cent month-on-month to S$263.83 billion. Among the segments that make up total consumer loans, only two categories - credit card loans and share financing to professional and private individuals - were higher.

Apart from housing loans (which make up about three-quarters of total consumer loans), car loans and other loans to professional and private individuals also retreated in May.

Car loans were marginally lower at S$8.95 billion, compared to S$8.96 billion in April. Other loans to professional and private individuals saw a 1.6 per cent dip month-on-month to S$39.13 billion.

But total loans increased 0.8 per cent to S$681.8 billion from S$676.26 billion a month ago, and it was a bigger rise of 2.1 per cent year-on-year, thanks to business loans.

Total business loans rose 1.5 per cent month-on-month to S$417.97 billion, as manufacturing loans climbed 3.2 to S$27.7 billion and general commerce loans jumped 4 per cent to S$68.56 billion.

Selena Ling, OCBC Bank's head of treasury research and strategy said: "It looks like there was some stabilisation in the May bank loans growth numbers. . . That said, US-China trade talks broke down in May itself and we're still pending the outcome of the Trump-Xi meeting on the G-20 sidelines to see if there will be a ceasefire for Trump's Plan B - namely 25 per cent tariffs on the remaining US$300 billion- plus of Chinese exports."

Maybank Kim Eng analyst Thilan Wickramasinghe thinks that May's manufacturing loans were higher despite a downturn in the sector as it is "most likely a signal of manufacturing capacity relocating from China to Asean". He added: "Most of the manufacturing loan growth was made from outside Singapore, and the Singapore banks booked just over a quarter of their loans in Asean."