HDB Concessionary Loans for Second-time Applicants

Sir, from January 2010 to September 2012, there were nearly 178,000 applications for HDB loans. Among these, 3,500 applications, or 2%, were rejected because the applicants had previously taken two or more HDB loans.

Two HDB loans are generally sufficient to meet the life-cycle needs of each flat buyer. The first loan helps buyers purchase their first home, while the second loan helps them right-size as their needs change. Flat buyers also have the option of taking a bank loan. Nonetheless, for buyers in exceptional circumstances, HDB may assist them by providing them with another HDB loan on a case-by-case basis.

Over the past 20 years, HDB's interest rate has been, on average, 1.5%-points lower than the market rates. That is why we need to restrict the number of HDB loans, in order to manage our limited loan subsidies.

Sir, I thank the Minister for the answer. The feedback is that there are residents who are trying to get a third loan because they have one transfer in-between, that is, between relatives. Therefore, that is not, strictly speaking, a second loan. There are also residents who have to change their flats because of divorce. The feedback is that they have difficulty getting another loan because of the two-loan policy. In view of HDB's principle of providing affordable quality homes, would HDB be prepared to review this policy so that we can try to allow as many residents as possible to own their homes, when they are trying their best not to be stuck with a rental flat, and instead buy their own home?

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Sir, as I said, the rejection rate is rather low – 2%. In any case, we do exercise discretion and respond with sympathy where we can. I have been watching the success rates of appeals. The last I saw, for appeals to HDB for house mortgage matters, the success rate is pretty high – 36%. I think this is quite good.

Sir, as Members of Parliament, we often encounter instances where the applicants are unable to get a loan from commercial banks due to their income levels. Yet, they are also unable to get HDB loans for various reasons. For example, their income levels could be too high to qualify. Their incomes could also be too high to qualify for HDB rental flats. They end up paying market rentals, which are way above what they would have paid to service their mortgages. I would like to ask the Minister whether such situations are desirable. Should we not help or facilitate these applicants to own their own flats, so that there is some secured retirement financing and, in a way a hedge against rising property prices?

Sir, home ownership as a social objective is something highly desirable, and which we strive to achieve. At the same time, it must be underpinned by prudence. Let us not forget the huge problem created in the US by the sub-prime loan crisis. While we will try to make sure that everyone who can afford it can own a home, the outcome that some Members are hoping for – 100% for everyone who puts up his hand will get a loan – is a little unrealistic because if we push beyond prudence, potentially, we can have a sub-prime crisis, as did the US.

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