The Monetary Authority of Singapore (MAS) published an information paper that sets out the supervisory expectations and identifies improvement areas based on the thematic inspections conducted on the residential mortgage pricing and disclosure practices of large mortgage lenders over 2020 and early 2021. The paper sets out MAS’ supervisory expectations in the areas of transparency, consideration of customer interests, and accountability and product governance in context of the mortgage lending business. MAS is also proposing changes to the Notices 632A, 1106A, 825A, and 115A, one of the aspects of which is the requirement for financial institutions to provide and explain a Residential Property Loans Fact Sheet (Fact Sheet) to borrowers when marketing property loans. MAS is seeking comments from financial institutions, consumers, and other interested parties until January 14, 2022.
The Fact Sheet covers the relevant information for a borrower’s decision to take up a property loan (including the interest rate of the property loan), the circumstances under which financial institutions may revise the interest rate, and the ways in which loan repayments may change under different interest rate scenarios. MAS is proposing amendments to the aforementioned Notices to enhance financial institutions’ disclosures on interest rate changes as well as alternative arrangements that financial institutions will provide to borrowers should they make unexpected interest rate changes after borrowers have committed to a property loan. This will help borrowers make informed decisions before committing to a property loan. MAS is also proposing amendments to the Notices to facilitate the process for financial institutions to obtain acknowledgements from borrowers on the Fact Sheet digitally or from an authorized joint-borrower on behalf of other borrowers. MAS also proposed administrative amendments to the Fact Sheet to make reference to loan packages pegged to the Singapore Overnight Rate Average or SORA, which financial institutions have started to offer. The Notices with the proposed amendments have been set out in Annex A of the consultation paper.
Comment Due Date: January 14, 2022
Keywords: Asia Pacific, Singapore, Banking, Residential Property Loans, Mortgage Lending, Lending, Interest Rate Risk, Disclosures, Fact Sheet, SORA, MAS
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