Home Loan Financing Knowledge Gap Must Be Addressed, New Study Says

More education needed to fill knowledge gap on mortgage finance, new study finds

ICompareLoan (TM) Home Loan Report

The PropertyGuru H1 2021 Consumer Sentiment Study said more education is needed to address knowledge gaps about mortgage finance.

The study also identified the need for increased awareness and education regarding the knowledge gap in mortgage finance, with 50% of Singaporeans indicating that their lack of knowledge of the required documents poses a challenge for them to get a home loan.

Other concerns include their inability to pay their down payment (39%) and job and income stability (36%). Meanwhile, nearly 2 in 5 Singaporeans (39%) are unaware that they can refinance their home loans. This number is higher among Millennials (47%) compared to middle-aged and older Singaporeans (33%).

Lack of Knowledge About Home Loan Financing Affects Everyone From Baby Boomers to Gen Z

When asked why they don’t refinance their home loans, 45% of Singaporeans believe that refinancing their mortgage during their lock-in period is a reckless decision, 34% perceive that a lot of effort is needed to refinance their mortgage, while 21% cite the need to pay thousands of dollars upfront when refinancing as a downside. These results all point to common misconceptions about mortgage refinancing among homebuyers.

The gaps in knowledge about home loan financing are most glaring when it comes to the process and benefits of refinancing

Paul Wee, Managing Director (FinTech), PropertyGuru Group said: “While most Singaporeans are aware of refinancing, their level of understanding of the refinancing process and its benefits is still low, which affects the growth opportunities of savings. A mortgage is a long-term commitment. There is no one-size-fits-all approach, so it must be regularly reviewed, like a health check, to ensure that everyone’s needs are met at every stage of life.

Mr. Paul Ho, Director of Mortgage Loans at iCompareReadysaid, “I don’t blame consumers for their lack of knowledge about home loan financing. The mortgage finance scene is constantly changing with new government regulations and global interest rate trends. This is one of the main reasons consumers need to work with trusted mortgage specialists. “

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Choosing a home loan can be a difficult decision given the multitude of factors involved. That is why consumers should use easily accessible mortgage platforms with banking or freelance mortgage experts who can offer personalized advice and help homeowners navigate the mortgage market every step of the way.

Mr Ho added, “Consumers don’t need to be overly anxious when buying a property if they are doing their homework and working with trusted hands that are not fleeting businesses.”

The study further showed that although there is general optimism, more than half of Singaporeans are still uncertain about future house prices and concerns about housing affordability have been raised.

The study’s overall sentiment index – which measures current satisfaction with real estate and the general climate, housing affordability, interest rates, perceived government efforts and real estate prices – increased by 2 points from 41 in H2 2020 to 43 in H1 2021. This increase was driven by Positive Perception of Interest Rates by Singaporeans and Outlook for House Prices. 56% of Singaporeans feel confident about buying property in today’s climate.

At the same time, 56% of Singaporeans remain uncertain about future house prices and 34% are concerned about late completion dates – highest among Millennials (aged 22-39) at 42%. Signs of buyers ‘concerns about housing affordability are reflected in the study’s home affordability rating, a score that measures consumers’ perceptions of Singapore property prices and their ability to afford a property at current prices and incomes. The rating fell by 5 points, from 69 in H2 2020 to 64 in H1 2021.

Buyers are feeling the pinch as house prices continue to rise

While property prices in Singapore continue to show an upward trend despite the pandemic, 84% of Singaporeans find house prices high, and fewer Singaporeans consider themselves able to afford a property with current prices and revenues, going from 66% in H2 2020 to 60% in the first half of 2021.

Despite the various home ownership measures introduced by the government, including extensive support to reduce mortgage repayments, more Singaporeans believe the government needs to do more to make housing affordable, from 62 % in H2 2020 to 65% in H1 2021. The rise in house prices over the last two quarters of 2020, fueled by pent-up demand after the circuit breaker, could have prompted Singaporeans to ask for a further easing of the right to buyer’s stamp (BSD) and lower initial down payment costs. 64% of Singaporeans hope the government will reduce the BSD while 49% ask for a reduction in the initial down payment cost for a house.

It should also be noted that the majority of requests for reduction in BSD and initial down payment are from millennials, at 66% (vs. middle-aged and older Singaporeans at 62%) and 54% (per compared to middle-aged and older Singaporeans at 45%), respectively.

3 in 5 Millennials prioritize saving for the purchase of a home over lifestyle during a pandemic

While 72% of Millennials plan to leave their family home within the next year, 28% are reluctant – citing lack of savings to own or rent a home (48%) and not be married (35%) as the main ones. obstacles for not having been able to do so.

Despite this, most Millennials are implementing proactive financial measures to help them achieve their dreams of homeownership. The study found that 69% of Millennials prioritize saving for the purchase of a home this year over experiences such as travel, food, recreation and stays.

The study results further showed that the majority (97%) of Millennials would rather buy a home than rent, citing resale HDB apartments as their preferred type of property (30%), followed by new private homes. non-real estate (29%) and private non-real estate resale houses (23%). Surprisingly, cohabitation is an unpopular housing option for them, with only 18% interest in the concept.

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