MAS restrict loan Tenure for Residential Properties

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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)
Stamp Duty$24,600$24,600$24,600$24,600
ABSD(Applicable   if this is the third and subsequent residential property)
Age of   borrower(Maximum   tenure 35 years)30303535
TenureAssume 30   yrsAssume 31   yrsAssume 31   yrsAssume 31   yrs
Down payment20% ($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 legal80%   ($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

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