HDB FLAT OWNERS (Bank origination loans)

HDB FLAT OWNERS

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(Bank origination loans): **

20.

Dr Ong Seh Hong asked the Minister for National Development since the introduction of bank origination loans (a) what is the total number of HDB flat owners taking up such loans; (b) how many of them are first time, second time and more than second time HDB flat owners respectively; (c) how many of them are those who switch from HDB origination loans to bank loans on their existing flats; (d) whether the Ministry or HDB makes it mandatory for all banks to fully explain the consequences of switching to, or taking up, bank origination loans; (e) how many flats on bank origination loans have been repossessed or are in the process of being repossessed by the banks; and (f) whether the Ministry or HDB has any guidelines on when and under what circumstances the banks can repossess HDB flats.

Mr Mah Bow Tan: Bank origination of HDB market rate loans has provided HDB flat buyers with attractive and flexible home loan packages offered by the various banks. Since 1st January 2003, flat buyers who are not eligible for an HDB concessionary loan have had to take up loans from banks/financial institutions instead. These include Singapore Permanent Resident households, households with monthly income of more than $8,000 and those who own private properties.

As at 31st August 2005, 64,000 HDB flat owners have taken up loans from banks/financial institutions. 40% were buying HDB flats for the first time, while 34% were second-time HDB flat owners. They included 10,200 households who had refinanced their existing HDB loans with banks. A significant number of these households were Singapore Permanent Resident households, private property owners and high-income earners.

Those who borrow from the banks to buy HDB flats are subject to the terms and conditions imposed by the banks. This was emphasised when the bank origination policy was announced in January 2003. HDB constantly reminds buyers, through various publicity channels and the media, to buy a flat that is within their means and not to over-stretch themselves financially. All flat buyers must exercise financial prudence in their home purchase. If they default on the loan repayment, whether it is for an HDB or bank loan, and they are unable to make alternative repayment arrangements, their flats may be repossessed.

Banks may repossess HDB flats according to the mortgage terms agreed to with the mortgagor, as well as the procedures set out in the Housing and Development (Mortgage to Lender) Rules 2002. So far, 61 mortgagee sale of flats by banks have been completed or are pending completion. They represent about 0.1% of the total number of bank loans taken by HDB flat buyers.

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