Approval Rate for HDB Non-concessionary Housing Loans
Ministry of National DevelopmentSpeakers
Summary
This question concerns the approval rate for non-concessionary HDB housing loans and the potential to increase such lending for residents who cannot secure commercial bank loans. Mr Ong Teng Koon inquired about the factors preventing higher approval rates and suggested over-collateralizing loans to help manage credit risks for applicants with financial difficulties. Minister for National Development Lawrence Wong replied that HDB may offer a third loan for urgent housing needs if households have sufficient savings and steady incomes. He noted that last year HDB assisted 20% of approximately 4,500 appeals, emphasizing that the 900 approved cases met the necessary criteria for servicing the housing debt. The Minister stated that rejections occur when applicants can actually obtain bank loans or lack the repayment capacity, making it more prudent for them to first stabilize their finances.
Transcript
20 Mr Ong Teng Koon asked the Minister for National Development (a) what is the approval rate for non-concessionary HDB housing loans; and (b) whether HDB will consider increasing such loans to help residents who are unable to obtain bank loans to purchase their HDB flats.
The Minister for National Development (Mr Lawrence Wong): Mr Speaker, HDB provides up to two housing loans at concessionary interest rate to eligible Singapore Citizen households. This is generally sufficient to meet the life-cycle needs of each flat buyer. Flat buyers also have the option of taking a bank loan.
Nevertheless, HDB has extended a third housing loan upon careful consideration of the merits of each specific case, particularly for those with urgent need of housing but are unable to secure commercial financing options. These households must have sufficient savings and steady incomes to service the HDB loan. Last year, HDB received around 4,500 such appeals, and assisted about 20% of the appeals or about 900 households. HDB will continue to evaluate such appeals, and extend flexibility where necessary.
Mr Ong Teng Koon (Marsiling-Yew Tee): I wish to ask the Minister what is preventing the HDB from giving more such loans, given that the cost of borrowing of HDB, the rate is much lower than the interest rate that HDB is getting from these loans? And if HDB is worried about the credit risks of these borrowers, can HDB consider over-collateralising the loan by basically giving less loan for every dollar of flat that the applicant is borrowing again?
Mr Lawrence Wong: Mr Speaker, there are basically two broad categories of cases where they would not be able to get the third housing loan when they apply for such a loan from HDB.
The first would be cases where they, in fact, can get a loan from the bank. And HDB would then ask them to take a commercial loan because they are, in fact, eligible. The second would be the one that Mr Ong has referred to. They cannot get commercial loans from the bank and they are asking for a third HDB loan. And in most of these cases, the reason why HDB rejects or is unable to approve is because they have unable to service the loan to begin with. So, there is an issue of them having difficulty with incomes and the ability to service the loan is in question. So, rather than having them over-stretch themselves, I think it is more prudent for them to build up their savings, steady their incomes and then they can consider applying for a HDB loan at a subsequent stage.