Amid a rough economic climate, cooling measures may halt the strong run-up in Singapore home prices

by Albert02

Amid a rough economic climate, cooling measures may halt the strong run-up in Singapore home prices

Amid a rough economic climate, cooling measures may halt the strong run-up in Singapore home prices. Only nine months after a series of property cooling measures went into effect late in 2021, the government announced steps commencing September 30, 2022, to maintain sustainable circumstances in the property market by requiring careful borrowing and regulating demand. Recent policy changes are projected to reduce housing demand and prices. To begin with, potential house buyers’ purchasing power has been curtailed by limiting the amount that buyers can gear up.

For private financial institution property loans, the Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR) are computed using a 0.5 percentage point higher medium-term interest rate floor. Mortgage TDSR and MSR will now be calculated using a 4% annual interest rate floor, up from 3.50% before.

The maximum TDSR is 55%, which refers to the percentage of a borrower’s total monthly income that goes toward monthly debt obligations, including the requested loan. Buyers of HDB flats and executive condominium (EC) units with a non-expired minimum occupancy period face a 30% MSR cap on the share of total monthly income that goes toward repaying all property debts, including the loan under consideration.

The qualifying loan amount available for HDB flat buyers requesting a loan from the HDB is calculated using a 3% per year interest rate floor, and the loan-to-value limit for HDB housing loans is reduced to 80%, down from 85% previously. Finally, prospective home buyers can borrow less money. Edmund Tie estimates that a S$1.5 million 30-year loan for a private home would now demand a monthly salary of approximately S$13,000, up from S$12,200 earlier, assuming no other debt obligations.

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Source:
https://www.businesstimes.com.sg/opinion/amid-a-rough-economic-climate-cooling-measures-may-halt-the-strong-run-up-in-singapore-home



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