SINGAPORE: The Monetary Authority of Singapore (MAS) will not be extending the temporary lifting of car loan restrictions for used cars beyond the two-month period.
Speaking in Parliament on Monday, Acting Minister Lawrence Wong, who is on the MAS' board of directors, said the time period is already "very reasonable."
He pointed to figures from the Land Transport Authority (LTA), which showed that of the 11,000 used cars acquired before the loan restrictions in February, 4,000 were sold in the following month.
Based on this trend, Mr Wong said dealers should be able to sell most of the remaining 7,000 used cars within the two-month period.
He assured that MAS has taken in the feedback, studied the issues very carefully and worked out what would be a reasonable period to help the used car dealers clear their inventory.
MAS had earlier restricted buyers of both new and used cars, to loan up to 60 per cent only.
They also have to service the loans over a shorter period of five years.
Mr Wong explained that in granting the temporary concession, MAS had considered the fact that demand had fallen more significantly for used cars.
The used car industry had found it challenging to dispose of the inventory that was acquired with higher COE values before the introduction of the restrictions in February.
He said it is not possible to relieve the industry on a continual basis without undermining the policy objectives.
The objectives are to encourage financial prudence, moderate the demand for cars and cool the prices of COEs.
He said the industry should adjust to the new reality in the car market.
Mr Wong said: “MAS will continue to monitor the developments in the COE market and will re-calibrate the financing restrictions for all cars - new and old in response to market conditions, in particular a sustained moderation in COE prices, but we will not in some time revert to the pre-February situation of having no financing restrictions for car purchases.”