Singapore’s central bank last Friday announced a new round of measures targeted at housing loans to maintain a stable and sustainable property market.
The latest MAS rules affect all types of properties that require a loan from banks.
Essentially, the total debt servicing ratio (TDSR) will be capped at 60 percent. This takes into account the monthly repayment for the loan that the borrower is applying for and the monthly repayments on other outstanding property and non-property debt obligations of the borrower.
“TDSR applies to all outstanding credit facilities and has been practiced by banks all along. MAS merely made this official this time round,” said Desmond Chua, Head of mortgage consultancy LoanGuru.
He added that the regulations are meant to standardise loan assessment among banks in Singapore and encourage financial prudence among borrowers.
“For variable and bonus income recognition, banks have been practicing around the range of 30-40 percent haircut. The TDSR announced has standardised the haircut of variable and bonus components to be at 30 percent.”
Since 2009, the city-state has imposed measures to cool the property market which has seen strong sales volumes and skyrocketing prices.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
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