The Monetary Authority of Singapore (MAS) is informing that the government has announced a package of measures to cool the private residential and Housing and Development Board (HDB) resale markets. With effect from December 16, 2021, the Total Debt Servicing Ratio (TDSR) threshold will be tightened by 5% points from 60% to 55%. The revised TDSR threshold will apply to loans for the purchase of properties wherein the option to purchase has been granted on or after December 16, 2021 and for the mortgage equity withdrawal loan applications made on or after December 16, 2021. Borrowers with existing property loans and loans granted before December 16, 2021 will not be affected by the revised TDSR threshold when refinancing their loans. The government will also tighten the loan-to-value (LTV) limit for loans from HDB from 90% to 85%. The revised LTV limit does not apply to loans granted by financial institutions, for which the LTV limit remains at 75%.
MAS also updated the rules on the mortgage servicing ratio and TDSR requirements for residential property loans. Mortgage servicing ratio refers to the portion of a borrower’s gross monthly income that goes toward repaying all property loans, including the loan being applied for. Mortgage servicing ratio is capped at 30% of a borrower's gross monthly income. TDSR refers to the portion of a borrower’s gross monthly income that goes toward repaying the monthly debt obligations, including the loan being applied for. Information on how to apply the TDSR threshold for property loans and what is exempted from the TDSR rules has been updated too.
In addition, MAS published guidelines on the application of TDSR for property loans under the MAS Notices 645, 1115, 831, and 128. These guidelines apply to all financial institutions in Singapore and assist them in applying the TDSR when granting property loans. Where the borrower is an individual, sole proprietor, or shell company, financial institutions are to consider the income level and debt obligations in assessing the debt repayment capability. The guidelines cover sound practices for the management of credit risk, TDSR threshold, and debt obligation and repayment ability. These guidelines became effective on December 16, 2021.
Effective Date: December 16, 2021
Keywords: Asia Pacific, Singapore, Banking, Securities, Merchant Banks, TDSR Requirements, TDSR Guidelines, Debt Servicing Ratio, Mortgage Servicing Ratio, Credit Risk, Lending, Residential Property Loans, MAS
Previous ArticleHKMA Expresses Support for Climate Action Plan of Government
Next ArticleAPRA Confirms CCyB of 1% from January 2023
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.
The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.