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SG New rules to seriously affect holders of multiple mortgages

Property Here - Thursday, July 04, 2013

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The latest mortgage rules introduced by the Monetary Authority of Singapore (MAS) will significantly affect multiple property owners and the mid-tier private housing segment in the Rest of Central Region (RCR), according to Knight Frank.

“Investors who have existing property loans and have sought various flexible ways to secure multi-property loans will now face greater limitations to obtain new loans for their next property purchase,” it said.

For instance, middle-income investors who have existing mortgages and other debt like car loans will struggle to buy a new property because their Total Debt Servicing Ratio (TDSR) could exceed the 60 percent limit.

Singaporeans with an existing HDB loan who wish to buy a private home may also encounter difficulties in getting additional loans.

“Individuals who have a higher proportion of variable income out of their monthly gross income would also face greater constraints to obtain higher loan quantum,” Knight Frank noted.

Mid-tier private housing in the RCR will also be impacted due to high prices and the loan-to-value (LTV) requirement. This segment is also favoured by investors who usually have existing loans. 

However, genuine buyers who have no existing mortgage or other major debt will be able to get their desired loan quantum. The impact of the curbs on the HDB resale market will also be limited as this segment already requires a Mortgage Servicing Ratio (MSR) of 30 and 35 percent for HDB and private loans respectively.

On the other hand, the 60 percent cap on TDSR could boost demand for more affordable homes such as shoebox and mass-market units. It could also grow the appetite for properties in other ASEAN countries, given the strong Singapore dollar and their positive growth potential. 

Nikki De Guzman, Junior Reporter at PropertyGuru, wrote this story. To contact her about this or other stories email