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Singapore-based United Overseas Bank, Southeast Asia’s third-largest bank by assets, has suspended loan applications for London residential properties as investors assess the uncertainties caused by the UK’s vote to leave the EU.

Other Singapore banks are advising clients to be cautious over political and foreign exchange risks in the wake of Brexit

Gains from an increase in the value of a property could be eroded if sterling depreciates against the Singapore dollar, Singapore’s DBS Bank is warning clients.

UOB, which is the largest Singapore-based lender for the London property market, said: “As the aftermath of the UK referendum is still unfolding and given the uncertainties, we need to ensure our customers are cautious with their London property investments.”

The bank explored other options but executives decided on a temporary suspension to minimise the risk of having to call in part of a loan if London property is revalued. 

UOB said it would monitor the market to assess when London property loans could be reinstated. The suspension does not apply to commericial property lending. 

Singapore rivals are taking a different course.

OCBC, Singapore’s second largest bank by assets, is still making finance available for London properties, but “monitoring the situation closely,” the bank said in a statement.

And Tok Geok Peng, DBS’s executive director of secured lending, said that the bank would continue to provide financing for London property purchases. 

However, Ms Tok said clients were being warned about currency fluctuation and potential changes of government policy. DBS, UOB and OCBC offer financing in both sterling and Singapore dollars. 

Ms Tok said: “For customers interested in buying properties in London, we would advise them to assess the situation carefully before committing to their purchases as there could be potential foreign exchange and sovereign risks.” 

The initial impact of the Brexit vote on the London housing market appears mixed. Estate agents in the UK capital report some buyers scrambling to take advantage of effective discounts from sterling’s weakness, while others have pulled out because of worries about London’s future.

Earlier this week, Singapore-listed property developer Oxley said it had received increased inquiries about the UK from potential overseas buyers since the Brexit result. 

Oxley, which is developing a 363,000 sq m residential, commercial and retail project in east London, said it would place greater emphasis on sales and marketing in the Middle East and Asia following the vote. 

Asian investors have traditionally found the UK attractive because of its combination of stable governance and the liquidity of the London property market. 

Analysts say that while a falling pound will affect rental incomes that are repatriated to Asian countries, the decline in the UK's currency also presents a buying opportunity. 

In a statement following the UK referendum vote, Nicholas Holt, head of research for Asia Pacific at Knight Frank, said: “The significant drop in the value of the pound, as in 2009, could lead to an uptick of interest by Asian investors, who, over the past few months have adopted a wait-and-see approach to the referendum — and will now see their buying power increase.”

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