Be prudent in buying a home

6 August 2012 

Editor,Voices
Today paper

I agree with the Minister for National Development Mr Khaw Boon Wan

that Singaporeans should be prudent and avoid buying an expensive property
on a long term mortgage loan, such as the 50 year loan that is introduced 
recently by a local bank.

I urge the Minister to review the practice of pricing HDB flats and  

the financing terms offered by the Housing and Development Board and their

partner banks.

Many Singaporeans are paying for their HDB flats on loans that stretch to 

30 years and require the income of both spouses to service the loans. 

Can these working people be sure that both of them can maintain their current jobs 

and earning capacity over a long period?

The mortgage payments may appear to be affordable under the 

low interest rate of 2.6% per annum. The current low interest 

environment cannot continue forever. The mortgage payment will increase by a 

hefty 26% when the interest rate is increased to (say) 4.5%, which is more 

compatible with the prevailing inflation rate.

Recently, the Canadian government took the step to limit mortgage loans to 

25 years to combat the bubble in property prices. I suggest that HDB should 

follow this prudent example, and keep the prices of HDB prices at an 

affordable level, representing not more than four years of the average combined 

family income. 

Tan Kin Lian