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 buyers can borrow to buy their homes will be restricted immediately, avoiding borrowers from having future troubles with loan servicing.

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, the cooling measures come after interest rates have risen significantly and are expected to rise further (HDB). The government will take numerous efforts to ensure that home buyers borrow within their means and to curb housing market demand. These become effective on September 30.

The MAS will raise the medium-term interest rate floor used to compute the total debt servicing ratio (TDSR) and mortgage servicing ratio (MSR) for private financial institution property loans by 0.5 percentage point. The portion of a borrower’s total monthly income that goes toward repaying all monthly debt obligations is known as the TDSR, whereas the fraction that goes toward repaying all property loans is known as the MSR, which is applicable to loans for HDB purchases. This suggests that the MAS is using stricter criteria to gauge borrowers’ ability to repay and hence qualify for a loan. This will apply to real estate loans if the option to purchase or sell is provided on or after September 30.

Mortgage interest rates will continue to be determined by private financial institutions. Stricter criteria will also be used to determine HDB unit buyers’ eligibility for a HDB concessionary housing loan. For calculating the authorized loan amount for HDB flats, an interest rate floor of 3% will be implemented from September 30. This means that the interest rate used to determine the qualifying loan amount for a HDB housing loan will be 3% per year or 0.1 percentage point more than the existing 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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