Stricter borrowing criteria for property buyers, 15-month wait for private property owners buying HDB flats

by Albert02

Stricter borrowing criteria for property buyers, 15-month wait for private property owners buying HDB flats

Stricter borrowing criteria for property buyers, 15-month wait for private property owners buying HDB flats. The maximum amount of money that home purchasers can borrow to purchase their homes will be tightened immediately, preventing borrowers from experiencing future issues in servicing those loans.

The cooling measures come after interest rates have risen significantly and are expected to rise further, according to a joint statement issued just after 11.40 p.m. on Thursday by the Monetary Authority of Singapore (MAS), the Ministry of National Development (MND), and the Housing Development Board (HDB). The government will take many steps to guarantee that home purchasers borrow within their means and to reduce demand in the housing market. These take effect on September 30.

MAS will boost the medium-term interest rate floor used to calculate the total debt servicing ratio (TDSR) and mortgage servicing ratio (MSR) for property loans made by private financial institutions by 0.5 percentage point. The part of a borrower’s gross monthly income that goes towards repaying all monthly debt obligations is referred to as the TDSR, whereas the portion that goes towards repaying all property loans is referred to as the MSR, which is relevant to loans for HDB purchases. This indicates that the MAS is applying harsher standards to determine borrowers’ ability to repay and hence qualify for a loan. This will apply to loans for the purchase of real estate if the option to purchase or sell is issued on or after September 30.

MAS will boost the medium-term interest rate floor used to calculate the total debt servicing ratio (TDSR) and mortgage servicing ratio (MSR) for property loans made by private financial institutions by 0.5 percentage point. The part of a borrower’s gross monthly income that goes towards repaying all monthly debt obligations is referred to as the TDSR, whereas the portion that goes towards repaying all property loans is referred to as the MSR, which is relevant to loans for HDB purchases. This indicates that the MAS is applying harsher standards to determine borrowers’ ability to repay and hence qualify for a loan. This will apply to loans for the purchase of real estate if the option to purchase or sell is issued on or after September 30.

Private financial organizations will continue to determine the real interest rates paid on mortgages. Stricter criteria will also be applied when determining the eligibility of HDB unit buyers for a HDB concessionary housing loan. From September 30 onwards, an interest rate floor of 3% will be implemented for calculating the acceptable loan amount for HDB flats. This means that the interest rate used to calculate the qualifying loan amount for a HDB housing loan will be the greater of 3% per year or 0.1 percentage point more than the current CPF Ordinary Account (OA) interest rate.

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Source: https://www.straitstimes.com/business/property/stricter-borrowing-criteria-for-property-buyers-15-month-wait-for-private-property-owners-moving-to-hdb-flats


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