FIRST-TIME HDB FLAT BUYERS

FIRST-TIME HDB FLAT BUYERS:

(Number not taking HDB concessionary loans): 1.

Mr Zainudin Nordin asked the Minister for National Development (a) from 2003 to date, how many Singaporeans who are first-time buyers of HDB flats did not use the subsidised loan scheme from HDB; (b) how many of these buyers faced difficulties in servicing the bank origination loan; and (c) what are the

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alternatives for these buyers apart from letting the bank repossess their flats.

The Parliamentary Secretary to the Minister for National Development (Dr Mohamad Maliki Bin Osman) (for the Minister for National Development): Mr Speaker, Sir, HDB records show that from 2003 to June 2007, there are about 11,500 first-time buyers of HDB flats who chose not to take a concessionary loan from HDB, but instead opted for a mortgage loan from commercial banks at market interest rates.

About 3%, or 320, of these cases faced difficulties in servicing their bank loans and had to give up their flats in mortgagee sales. Flat buyers who take bank loans to finance their flats are informed that they would be subject to the mortgage financing policies of the banks. Banks have their own financial assistance measures. Mortgagors who have problems servicing their bank loans should approach their banks for help.

For the 320 cases whose flats were repossessed by the banks, they have generally been able to find alternative accommodation on their own. In a small number of cases, about 30, HDB has acceded to their appeals to be allocated a HDB rental flat, in view of their extenuating circumstances.

Mr Zainudin Nordin (Bishan-Toa Payoh): Sir, the Parliamentary Secretary mentioned about "informed". How are the mortgagees informed about their commitment and the help that they can get? And why are these first-time buyers going to the bank rather than getting their loans from the HDB?

Dr Mohamad Maliki Bin Osman: Sir, the Member is very right. We want to make sure that home buyers purchase their flats with relevant information, ie, that they

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make informed decisions, before they commit to the purchase of their flats. Information is available everywhere - on their websites, in their promotional brochures, and in a lot of documents that are made available to the flat buyers. What is important is to make sure that flat buyers seek relevant information from these relevant sources.

Apart from that, many flat buyers rely on their housing agents to help them with flat purchases. One of the most important things is to make sure that housing agents also play their role in informing their clients with regard to information that is relevant to them, whether they are eligible for loans and grants, and so on. What is important is for the flat buyers, apart from getting all this information, to make informed decisions with regard to what they are capable of buying. We always encourage financial prudence to make sure that they buy within their means.

HDB has also put in place several measures. So when flat buyers first come in, at the point of first appointment, HDB officers will look through a checklist and make sure that flat buyers are aware of their eligibility and that they are informed of what are their eligibility as far as loans are concerned.

With regard to why they choose bank loans, it is market forces, independent of what they choose to take up. At some point, the market rates given by the banks are a lot more attractive. So we leave it to the flat buyers to make the decision, so long as we make sure that they have made their decisions with the relevant information that is being given to them.

Ms Irene Ng Phek Hoong (Tampines): I would like to ask the Parliamentary Secretary, for flat buyers who go for bank loans but then find that they cannot service them, can HDB allow them to switch to HDB concessionary loans?

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Dr Mohamad Maliki Bin Osman: Sir, HDB cannot do that. It is not wise for HDB to do that. HDB cannot be the one to take over all the loans that are not well serviced by the banks. The most important lesson for flat buyers is to make sure that they understand the commitment that they have made with the banks. They are aware as to what are the obligations they have when they take on the bank loans. Like I mentioned in my earlier reply, the banks have got their own financial assistance measures. They should go back to the banks and try to get assistance from the banks. As far as possible, HDB will try to help those who are really in financial difficulties. Sometimes, we assist them. We waive the minimum occupation period for them to sell their flat to resolve some of their issues. But at the end of the day, it is not wise for HDB to take over loans that are not well serviced by the banks.

Mr Zainudin Nordin: If after they have sold their flat they want to buy another flat and take a loan from HDB, would they be considered as a first-time loan mortgagee by the HDB?

** &nbs2/16/2013p; Dr Mohamad Maliki Bin Osman ** : If the first loan that they have taken is from the bank and they have been assessed as not having taken any loans before, then the household would be considered to be a first-time loan applicant and, therefore, they would be eligible for a HDB loan. But we have to really assess the case. This is because sometimes we have situations where the husbands or wives may have taken first loans with flats that they owned with their parents and they are not aware of it, and they think that they are first-time buyers. They come back to us and HDB made an assessment that when they had taken the first loan with their parents, they would be considered as second-time applicants and they would not be eligible for another loan unless they are an upgrader.

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Mr Cedric Foo Chee Keng (West Coast): Sir, may I ask the Parliamentary Secretary about the logic of allowing second HDB loans to upgraders and not for downgraders. The latter group is apparently the more needy group.

Dr Mohamad Maliki Bin Osman: Sir, I think we have discussed this policy before. By and large, the assumption behind the policy is one where we want to encourage upgraders. So, first-time buyers are eligible for a concessionary loan and, as they improve their lives, we want to encourage them to upgrade, and therefore we facilitate their upgrading with another concessionary loan. However, we understand that downgraders may require certain assistance. But not all downgraders require financial assistance. This is because sometimes when they monetise or sell their assets, they do make sufficient proceeds, and we believe that the proceeds are sufficient for them to purchase a smaller flat. For cases that require assistance, HDB will look at them on a case-by-case basis. But we want to discourage people from downgrading, making proceeds from the downgrading, and then getting another concessionary loan, because these are subsidised loans from the Government.