Strangely, I have found myself to be in a position of defending and praising a Minister once again. I recently praised Khaw Boon Wan for taking firm quick action over the tender of NParks’s purchase of their bicycles. Now I have to praise him again for his statement of caution on the newly launched 50-year property loan.
Now, I know of some home buyers who like the idea of a 50-year loan. To some home buyers, they will almost always take the maximum loan tenure available as this enable them to stretch their purchasing capacity. Mr. Khaw's statement saying that the 50-year loan is a gimmick is right on the money as there is almost no way anyone can pay a 50-year loan in its entirety.
Even if someone take the loan when they are 20 years old, by the time the loan is finished, he will be 70! That's past the current retirement age! The 50-year loan is just a gimmick by property agents and developers to entice home buyers to folk out cash they do not have to buy a house beyond their means. In fact, you can argue that this 50-year loan idea is to encourage property speculation as the only way it will work is if the home buyer flip the property in a few years time after purchase.
So I fully appreciated this warning by Mr. Khaw. I agree that the government can't ban banks from offering the loan but this official warning should be more than enough for home buyers. If home buyers ignore this warning, then they only have themselves to blame. The government, and Mr. Khaw, has done all they can.