Singapore introduces new property cooling measures: Maximum loan quantum limits tightened, loan-to-value limit lowered

by Albert02

Singapore introduces new property cooling measures: Maximum loan quantum limits tightened, loan-to-value limit lowered

Singapore introduces new property cooling measures: Maximum loan quantum limits tightened, loan-to-value limit lowered. The government announced a host of new property cooling measures on Thursday (Sept 29), aimed at reducing demand in the face of rising market interest rates.

Among the measures are lowering maximum loan amounts and instituting a 15-month waiting period for private home buyers purchasing Housing Board resale flats. For HDB loans, the maximum loan-to-value (LTV) will be reduced from 85% to 80%. Just after 11.40 p.m. on Thursday, the HDB, the Monetary Authority of Singapore (MAS), and the Ministry of National Development (MND) issued a joint press release.

Market interest rates, according to the agencies, have “risen significantly” and are expected to rise higher in the future, influencing borrowing costs for house purchases. “The government would limit the maximum loan quantum limits for housing loans in order to encourage cautious borrowing and avoid future issues in servicing house loans,” they stated. When calculating borrowers’ repayment capabilities, higher interest rates will be assumed. This will be implemented in two steps: a 0.5% increase in the medium-term interest rate floor used to compute the overall debt servicing ratio and the mortgage servicing ratio, and the implementation of a 3% interest rate floor for calculating the eligible loan amount for HDB-issued loans.

The increased medium-term interest rate floor will be applicable to real estate loans made on or after September 30. If there is no purchase option, it will take effect on or after the sale and purchase agreement’s effective date. Private financial firms, they claim, will continue to set mortgage interest rates. The new HDB loan interest rate floor will apply to new HDB loan eligibility letter applications received on or after September 30 at midnight.

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Source: 
https://www.channelnewsasia.com/singapore/singapore-property-cooling-measures-loan-borrowing-criteria-hdb-ltv-limit-15-month-wait-out-period-2974776


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