MAS published amendments to Notices 632, 632B, 645A, 825, 825B, 831A, 1106B, and 1115A related to the residential property loans in Singapore. The amendments shall take effect on April 06, 2020. Notices 825, 825B, and 831A apply to all finance companies in Singapore while Notices 632, 632B, and 645A apply to all banks in Singapore and Notices 1106B and 1115A apply to all merchant banks in Singapore. MAS also issued a statement that clarifies the application of the loan-to-value (LTV) limits and total debt servicing ratio (TDSR) for residential mortgages and mortgage equity withdrawal loans. This will help individuals and businesses explore options to meet their cash flow needs.
Notices 632 and 632B set out the rules for banks when granting residential property loans, including limits on loan amount, conditions for loans, and tenure of credit and refinancing facilities. Notices 825 and 825B sets out set out the requirements for finance companies to comply with when granting new and refinanced residential property loans, including LTV limits and loan tenure rules. Notice 1106B sets out rules for merchant banks when granting residential property loans to individuals and non-individuals. Notices 645A, 831A, and 1115A set out requirements on computing the TDSR for property loans for banks, finance companies, and merchant banks, respectively.
In its statement, MAS has provided the following clarifications:
- Small and medium-size enterprise (SME) borrowers are not subject to TDSR if they qualify for payment deferments on their secured property loans. This payment deferment relief was announced by MAS on March 31 as part of the financial industry’s relief package for SMEs.
- Businesses that take up mortgage equity withdrawal loans secured on residential or non-residential properties are not subject to TDSR and LTV limits. This is provided under MAS’ current rules to facilitate the provision of credit to businesses, some of which may rely on mortgage equity withdrawal loans to finance their operations.
- For individuals (including sole proprietors), TDSR will not apply to deferment of mortgage repayments (for residential, commercial, or industrial properties), refinancing of owner-occupied residential mortgages, mortgage equity withdrawal loans if the LTV ratio does not exceed 50%, and unsecured credit facilities.
Effective Date: April 06, 2020
Keywords: Asia Pacific, Singapore, Banking, Securities, Residential Property Loans, Merchant Banks, Debt Servicing Ratio, LTV, SME, MAS
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