50-year housing loan a gimmick: Khaw

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Speaking to reporters, National Development Minister Khaw Boon Wan called on home hunters to spend within their means. "My message has always been prudence ... There is now some gimmick, a bank offering 50-year loans. Please don't fall for that, it doesn't make sense," he said.

He added: "If your salary allows you to buy a three-room flat, buy a three-room flat. In 10 years, I'm quite sure, if you continue to work hard, your salary will grow, and then you can upgrade. By that time, if Singapore's economy is doing well, your three-room flat will fetch a better price ... you can then upgrade (to) four-room, five-room.

"But if you want to immediately come out from school and get a five-room flat, and think that a 50-year loan will help you achieve that, I don't think that is very wise."

Last month, United Overseas Bank reportedly started offering 50-year home loans.

Mr Khaw said he has been keeping tabs on the number of applicants for the 50-year home loans. "As far as I gather ... the numbers are very few, which I think is a good sign," he said.

Property analysts TODAY spoke to shared Mr Khaw's concerns that young Singaporeans may overstretch themselves - with the current low interest rate environment providing a false picture.

SLP International head of research Nicholas Mak said: "They may comfortably be able to afford HDB flats, but they stretch themselves and get a condominium. Then when interest rates go up, or if they lose their jobs, they'll be in trouble."