While the tighter financing conditions aim to stabilize the property market, critics warn that the sharp rise in mortgagee-sale listings shows the measures are causing real hardship for ordinary homeowners. The current six-year high in forced sales is a distress signal that policymakers should not ignore, as it could spiral into a broader downturn.
The main concern is that the cumulative effect of high interest rates and strict loan-to-value limits has trapped many homeowners who, despite being able to afford their loans initially, cannot refinance or sell quickly enough to avoid default. The cooling measures have reduced buyer demand, making it hard for distressed sellers to exit without a loss. This creates a negative feedback loop: more listings push prices down, triggering more defaults.
Critics also point to the human cost. Many affected are middle-income families who bought homes as owner-occupiers, not speculators. The mortgagee-sale process typically results in these families losing their homes and any equity, often leading to financial ruin. Unlike during the global financial crisis, Singapore's economy is not in recession, yet these homeowners are paying the price for policies designed to curb speculation that largely occurred among investors.
Economists argue for a more targeted approach: instead of blanket tightening, regulators could allow exceptions for genuine owner-occupiers facing temporary financial strain, or offer more refinancing support through banks. Without relief, the rising mortgagee-sale numbers could undermine consumer confidence and slow the broader economy. The risks are not just for homeowners but also for banks facing higher credit losses and the property sector as a whole.