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Singapore introduces new property loan curbs
Singapore's central bank announced on Friday new rules that limit the size of property loans financial institutions can grant to individual buyers.
The Monetary Authority of Singapore said in a statement that, from Saturday, financial institutions (FIs) should not grant any property loan that exceeds a total debt servicing ratio (TDSR) of 60 per cent.
The TDSR framework, it said, will require financial institutions to take into account borrowers' other outstanding debt obligations when granting property loans.
The move is to "encourage financial prudence among borrowers" and strengthen credit underwriting practices, it said.
Under the new rules, financial institutions will be required to compute the TDSR, or the percentage of total monthly debt obligations to gross monthly income, on a consistent basis.
The TDSR will apply to loans for the individual's purchase of all types of property, loans secured on property and the re-financing of all such loans.
The central bank also tightened rules on the application of loan-to-value limits.
Among others, it will require borrowers named on a property loan to be the mortgagors of the residential property for which the loan is taken.
The refinements are designed to ensure the effectiveness of LTV limits put in place to cool investment demand in the housing market, MAS said.
The new property loan rules follows seven rounds of government measures to cool Singapore's property market.
For more details about the new rules, read the statement here.
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