TR EMERITUS

BT reported today (24 Jun) that the number of properties put up for auction by mortgagees has hit a new high in current Q2 (Apr-Jun 2014). A mortgagee sale occurs when the borrower has stopped making loan payments to the mortgagee or lender and the mortgagee has no choice but to auction off the pledged property so as to recover back its loan. The trend is seen gaining momentum due to rising supply of homes, weaker rental market and the new total debt servicing ratio (TDSR) framework set by MAS. Property consultant, Colliers International, has reported that in this present quarter, there are already 42 mortgagee sale properties which have been put up for auction. This is already more than previous years' whole-year figures: 2011 - 39 properties 2012 - 24 properties 2013 - 32 properties 2014 Q1 - 22 properties 2014 Q2 - 42 properties (present) The present Q2 figure is already almost doubled of last quarter's and the combined first-half tally of 64 for this year is already doubled that of the whole of last year. At present rate, the number of mortgagee sales for this year will likely be 4 times that of last year. Auctioneers said this reflects the difficulty that financially stretched borrowers face in securing buyers for their properties especially since the implementation of the TDSR framework. The TDSR framework was mandated by MAS in June last year to ensure that borrowers do not become over-leveraged. It’s a standard that applies to property loans granted by all financial institutions in Singapore. TDSR calculates the percentage of the borrower's income that can go into servicing loan. At present, MAS mandates that a person's housing loan repayments, after adding all other repayment obligations (e.g., student loans, credit card debts, car loans, personal loans, etc.) cannot exceed 60% of the borrower's income. Since a borrower who exceeded the TDSR can't find buyers for his property, the financial institution has to step in to repossess the property and auction it off. The trend is expected to gain momentum as the rising supply of private homes will make it even harder for borrowers to find buyers themselves, resulting in more properties ending up as mortgagee sales. Furthermore, the reduced inflow of expats into Singapore is shrinking the pool of potential tenants, hitting rental incomes and hurting owners' ability to service their property loans. Under a "forced selling" situation, a mortgagee sale property will tend to fetch lower prices. A property consultant said that due to the exuberance at private housing launches in the past few years, many buyers bought uncompleted properties "off plan" with the non-savvy ending up with units that have undesirable orientation or layout. Such owners now face difficulty finding buyers and tenants. Another consultant advised that those having problems servicing loans to be realistic as it is a buyer's market today. She said that potential buyers would now be anticipating price corrections. They will not be sticking to the last transacted price in the project some time ago.  Read More →

(June 23) -- Reclamation works under the 'Forest City' project, that is feared by Singapore to have a possible impact on the island republic, does not require the Environmental Impact Assessment (EIA) report as the area reclaimed is not more than 50 acres. According to the Johor Director of the Department of Environment (DOE) Mokhtar Abdul Majid, currently reclamation works at the Johor Straits, near the Gelang Patah Second Link, only involved an area measuring 49 acres. "As the area reclaimed is not more than 50 acres, it does not require the EIA report," he told Bernama today when asked on the sea reclamation works that drew concern from the Singapore government.   Read more:     http://www.bernama.com/bernama/v7/ge/newsgeneral.php?id=1048524    Read More →

Lim Swee Say writes to Channel News Asia to clarify but leaves more confused. Lim Swee Say, the PAP MP and Minister without Portfolio, has written in a clarification to Channel News Asia which he said has misreported him on the issue of CPF yesterday. In an interview yesterday with the State-owned news channel, the gaffe-prone Minister was quoted as calling on Singaporeans to prepare for retirement by "using less CPF money when young". This remarks subsequently went viral on the internet with many citing it as further proof of the lack of intelligence of the Minister. No doubt in a hurry to correct this image, Lim wrote a lengthy and convoluted clarification to Channel News Asia today: "I refer to the article, "Prepare for retirement 'by using less CPF money when young'" (23 June). The article para-phrased my comments and wrote, "The best way for Singaporeans to prepare for retirement is to use less of their Central Provident Fund (CPF) money when they are young." It gave the impression that I have urged Singaporeans not to use their CPF monies before retirement for any purpose including housing, healthcare and education for our children. This is incorrect. For the record, I made three points about CPF: Firstly, CPF is your money. Nobody can take away that money from you. Secondly, your money with CPF is 100% safe and continues to earn risk free interest, even during challenging times like the global financial crisis in 2009. As the third point was reported out of context, I reproduce the relevant text of my interview here: "Thirdly, the money is mainly for your retirement purpose. Besides housing, healthcare and education for your children, a very important part of CPF is to cater for retirement. So, for every dollar, if you can defer the use of the dollar, it is better to defer the use of the dollar when you are still young. For example, instead of thinking of whether you can spend your CPF savings at the age of 55, I think we should think about how we should help our Singaporeans remain employed, to continue to earn a good living, a good job and at the same time, to continue to contribute to the CPF. Because the more money you have in your CPF and the longer you defer the use of the CPF, the more you will have for retirement, as all of us are living longer and longer. So, these are the three basic points: firstly, the CPF is your money, no one can take away from you. Secondly, your money is 100% safe. Thirdly, the less you make use of your money when you are young, the more money you will have for retirement." It is clear in this context that 'young' refers to those who are aged 55 and "less use" of the CPF money refers to the CPF cash withdrawal for purposes other than housing, healthcare and education for the children." We are not quite sure what to make of this. According to the Merriam Webster dictionary, the word "young" means: "being in the early stage of life, growth, or development." http://i.word.com/ithesaurus/young So why Lim chose to use the word "young" to describe those who are on the cusp of retirement is a great mystery. Secondly, besides using CPF money for housing, children's education and healthcare, aren't Singaporeans entitled to invest the remaining investible sum into instruments that may potentially pay more to supplement the low interest rate of 2.5%? Otherwise how are we all going to retire on our CPF after paying for housing, children's education and healthcare?   The Alternative View [source]: https://www.facebook.com/pages/The-Alternative-View/358759327518739    Read More →