Singapore, 5 October 2012…The Monetary Authority of Singapore (MAS) will restrict the tenure of loans granted by financial institutions for the purchase of residential properties. MAS’ move is part of the Government’s broader aim of avoiding a price bubble and fostering long term stability in the property market.
2 The maximum tenure of all new residential property loans will be capped at 35 years. In addition, loans exceeding 30 years tenure will face significantly tighter loan-to-value (LTV) limits. This will apply to both private properties and HDB flats. The new rules will take effect from 6 October 2012.
New rules on loan tenure
9 The new MAS rules impose an absolute limit of 35 years on the tenure of all loans for residential property. This will apply to loans to both individual and non-individual borrowers, as well as refinancing loans1, from 6 October 2012.2
10 In addition, MAS will lower the LTV ratio for new residential property loans to borrowers who are individuals, if:
- the tenure exceeds 30 years; or
- the loan period extends beyond the retirement age of 65 years.
For these loans, the LTV limit will be:
- 40% for a borrower with one or more outstanding residential property loans3; and
- 60% for a borrower with no outstanding residential property loan.
11 MAS will also lower the LTV ratio for residential property loans to non-individual borrowers from 50% to 40%.
How these new measures work?
For a $1 million apartment
|Buyer 1 (no outstanding residential ppty loan)||Buyer 2 (no outstanding residential ppty loan)||Buyer 3 (no outstanding residential ppty loan)||Buyer 4 (has one or more outstanding residential ppty loans)|
|ABSD(Applicable if this is the third and subsequent residential property)|
|Age of borrower(Maximum tenure 35 years)||30||30||35||35|
|Tenure||Assume 30 yrs||Assume 31 yrs||Assume 31 yrs||Assume 31 yrs|
|Down payment||20% ($200,000)Minimum cash component: 5% ($50,000)||40%($400,000)Minimum cash component: 10% ($100,000)||40% ($400,000)Minimum cash component: 10% ($100,000)||60% ($600,000)Minimum cash component: 10% ($100,000)|
|Maximum Loan – no other subsidy like legal||80% ($800,000)||60 % ($600,000)||60 % ($600,000)||40 % ($400,000)|
|Monthly instalment based on 1.08% p.a||$2,602||$1,898||$1,898||$1,265|
|Monthly instalment based on 2.6% p.a||$3,202||$2,350||$2,350||$1,567|