Property market jitters weigh on local banks' loan books

Loan growth to stay subdued as mortgages dwindle.

Singapore's lenders will endure sub-par loan growth this year as consumers shy away from committing to mortgages.

According to BMI Research, the cooling residential property market will continue to act as a drag on the extension of credit.

Growth in residential property related loans in particular continued to lose momentum in June, falling to a multi-year low of 4.9% y-o-y in June versus 5.1% previously.

“Weakness in the residential property market continues to act as a key drag on demand for housing loans, and we expect the factors behind this correction to persist over the coming quarters,” BMI Research said.

BMI Research expects total loan growth to fall to 3.5% this year, following a 5.7% expansion in 2014.