After a large rise in interest rates, which is expected to continue, cooling measures have been implemented.
SG – Singapore With immediate effect, the maximum amount that property buyers can borrow will be reduced in order to prevent future loan servicing issues for borrowers.
In a joint statement released shortly after 11.40 p.m. on Thursday, the Monetary Authority of Singapore (MAS), Ministry of National Development (MND), and Housing Development Board (HDB) stated that the cooling measures come after interest rates have risen significantly and are likely to do so in the future.
The government will take a number of steps to guarantee that homebuyers borrow only what they can afford and to control demand in the real estate market. These start on September 30.
The medium-term interest rate floor used by MAS to determine the total debt servicing ratio (TDSR) and mortgage servicing ratio (MSR) for property loans made by private financial institutions will be increased by 0.5 percentage points.
While MSR, which applies to loans for HDB purchases, refers to the part that goes toward repaying all property loans, TDSR refers to the portion of a borrower’s gross monthly income that goes toward paying off all monthly debt obligations.
This indicates that MAS is applying harsher standards to determine borrowers’ eligibility for loans and their capacity to repay them.
If the option to purchase the property or the sale and purchase agreement is issued on or after September 30, this will apply to loans for those purchases.
The private financial institutions will continue to set the actual interest rates applied to mortgage loans.
When determining a housing board flat buyer’s eligibility for a HDB concessionary housing loan, stricter requirements would also be in place.
A 3% interest rate floor will be in place starting on September 30 for the purpose of determining the permissible loan amount for HDB flats.
This means that the higher of 3% per year or 0.1 percentage point over the current CPF Ordinary Account (OA) interest rate would be utilized to calculate the allowable loan amount for a HDB housing loan.
For new applications for a HDB Loan Eligibility (HLE) letter received on or after September 30, the new 3% interest rate floor will be in effect. Existing HLE applications received by HDB prior to 12am on September 30 will not be impacted.
From October 1 to December 31, the interest rate on the HDB home loan will not change from 2.6% annually.
For HDB housing loans, the maximum loan-to-value (LTV) will be reduced from 85% to 80%.
In contrast to the previous limit of 85%, buyers will now be able to borrow up to 80% of the value of the apartment. In other words, they are limited in how much they can borrow.
Larger HDB resale flats will be most affected by the new property cooling rules, which could increase rents.
For newly begun sales exercises and finished resale applications received by HDB on or after September 30, the lower LTV limit will be in effect.
From September 30 forward, present and previous owners of private residential property must wait a minimum of 15 months before purchasing a non-subsidized HDB resale flat in order to reduce demand in the HDB resale market. Currently, if they sell their private properties within six months after purchasing a HDB unit, they are permitted to purchase a HDB resale flat on the open market.
Former private property owners are people who sold a private property before submitting a request to purchase a resale apartment.
This interim action was decided, according to the authorities, “to ensure that resale apartments remain cheap for flat buyers, especially for first-timers,” they stated.
The action will be reevaluated in light of shifting market conditions and general demand, they noted.
It follows a growth of more than 5% in the HDB Resale Price Index as of the end of the second quarter of this year.
For first-time private property owners who want to apply for the CPF Housing Grant and Enhanced CPF Housing Grant for their purchase of a resale unit, the wait-out period is still 30 months.
Seniors who are 55 years of age or older and their spouses who are relocating from their private property to a 4-room or smaller resale apartment are likewise exempt from the wait-out time.
If they are 65 years of age or older, these seniors may continue to purchase 2-room Flexi flats on short lease and Community Care Apartments from HDB.
The agencies added that present and past owners of private property, whatever of age, who experience extreme conditions such financial hardships may seek aid from HDB.
They claimed that HDB will evaluate their position on a case-by-case basis.
Unfortunately, many that wish to buy HDB after selling their private property will not be able to do so as they will need to wait 15months in order to do so.
Why don’t look at some of the development that will be launching soon. and you do not need to wait 15months to get it. These developments are Tenet EC, The Reserve Residences and Lentor Hills Residences.