Housing loans shrink for a third consecutive month

Singapore

HOUSING loans in Singapore shrank for a third month in April, leading a continued contraction in consumer loans, preliminary data from the Monetary Authority of Singapore (MAS) showed on Friday.

Mortgages booked in April on a net basis came in at S$202.76 billion, falling from S$203.38 billion in March.

With housing loans making up roughly three quarters of consumer lending, overall consumer loans stood at S$264.57 billion, down from March's S$264.67 billion.

This week, Minister for National Development Lawrence Wong told Bloomberg that almost a year after intervening to stem soaring property prices, Singapore has stabilised the property cycle. The measures are now in their 11th month. He said in an interview with Bloomberg Television in Singapore: "The property market last year, before the cooling measures were put in place, we saw prices rising very sharply. There was a very real risk that prices would outpace fundamentals, and I think if that had happened, then eventually it would lead to a destabilising correction, and I think everybody would be worse off.

"It was, as we had stressed then, not to bring down prices, but to stabilise and moderate the cycle, and I think we have achieved that effect."

Overall bank lending in Singapore was flat in April from a month ago, bogged by the decline in consumer loans and moderated growth in business lending.

Loans through the domestic banking unit, which captures lending in all currencies but reflects mainly Singapore-dollar lending, was at S$676.26 billion in April, unchanged from the previous month.

From a year ago, total lending in April rose 1.4 per cent, weaker than the 2.2 per cent year-on-year gains posted in March.

In a report, Moody's Investors Service said it expects domestic loan growth at Singapore's three largest banks to continue to be modest, at about 5 per cent in 2019, unchanged from 2018.

"Increases in consumer loans, mainly mortgages, are likely to be anaemic due to the macro-prudential measures and tepid demand," Moody's said. Instead, it predicts that growth will mainly come from the corporate and SME sectors.

The growth in business loans flattened in April, inching up to S$411.69 billion from S$411.47 billion in the previous month. This largely reflected building and construction loans, which rose 1.7 per cent over the month to S$138.90 billion.

But the gains were partly offset by contractions in general commerce and manufacturing loans, among other lending segments.