Don't freak out, mortgage loan growth will bounce soon

Even amid MAS' property cooling measures.

According to DBS Vickers, mortgage loan growth will continue to slow. Impact of latest property cooling measures should see mortgage loans further easing though not significantly.

Here's more from DBS Vickers:

Mortgage loans growth over the past 2 years peaked at 23.4% y-o-y in Aug-10 and ended at 21% in 2010. Based on previous experiences, upon implementation of such measures, mortgage loan applications fell over 2-3 months but subsequently normalised.

But it appears that the measures set in Jan-11 saw mortgage loan growth declining from 23% y-o-y to 14.7% y-o-y in Aug-12. We expect mortgage loan growth to gradually reduce for the rest of the year but supported by drawdowns from previous mortgage applications.

We forecast mortgage loans to grow at 10% for 2012. FY13-14F mortgage loan growth is likely to reduce further to 7-8% as impact of the new measures kick in.

As at 2Q12, DBS, OCBC and UOB’s mortgage to total loans stood at 21%, 25% and 29% respectively and each bank grew mortgage loans by 9%, 21% and 17% y-o-y respectively.

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