Debated in Parliament on 12 Feb 2019.
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.
Mr Speaker, the Housing and Development Board (HDB) provides up to two housing loans at concessionary interest rate to eligible Singapore Citizen households. This is generally sufficient to meet the lifecycle 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 Speaker: Mr Ong Teng Koon.
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 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. 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 Teng Koon 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 are 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 overstretch themselves, it is more prudent for them to build up their savings, steady their incomes and then they can consider applying for an HDB loan at a subsequent stage.
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