The current state of affairs concerning the correction in Singapore’s property market may be putting pressure on the city-states banking system and the quality of its loans. As reported by Fitch Ratings in a report released Friday, January 30.
In spite of this local banks such as Overseas – Chinese Banking Corp. (OCBC), United Overseas Bank (UOB), and DBS will be able to absorb a significant rise in credit costs due to their robust loss absorption buffering system, according to the agency’s report for The Vales.
The Vales EC
Prices on residential properties such as The Vales in Singapore are down 528% as compared to the 2013, the report also cites.
The report goes on to say that, Singapore banks exposure to defaults on mortgages to be minimal due to the overall healthy balance sheets that homeowners have and the fact that they have adequate collateral to cover mortgage costs. This is due in part to Singapore’s overall strategy in the past few years that include strengthening mortgage underwriting practices and procedures for loans given out at local banks.
Property Market Prices The Vales
Fitch went on to note, defaults in mortgages in both Singapore and Hong Kong stand at .36% and .02% respectively at the end of September 2014, which is a remarkably low number.
Singapore however, expects loan losses to rise as government cooling measures continue. The Monetary Authority of Singapore (MAS) is expected to being more vigilant in the coming year for signs of further weakening and stress in the market on The Vales.
The Vales EC
The MAS is being extra observant in order to cash tertiary effects in the housing slowdown, such as rising construction company defaults, as well as a slump in the private home buying market for The Vales EC.