THE Government has imposed fresh curbs to cool the property market with the introduction of a new debt servicing framework.
From June 29, a buyer’s monthly housing repayments cannot exceed 60 per cent of his income.
The Monetary Authority of Singapore will also refine rules related to the application of the existing loan-to-value (LTV) limits on housing loans.
On first glance, this seem a rather useless measure.
It is useless because exceeding so much of your monthly income to service leverage assets is rather risky that only the minority will do it.
Or is it really useless.
The government would probably have better data then we do. Now what if the data they are seeing is that a significant proportion of locals are really doing this?
Now that would be a startling revelation. Or this could just be a proactive rule just in case Singaporeans get really stupid financially to do something like that.
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jiaxu song
Monday 1st of July 2013
there nothing scary about the ability of pple on this island to service their bank loans... the scary truth in this exercise is that there are too many pple exploiting the loopholes....this country is full of kiasu pple...a lot of smart pple for the country good.
Sinkie
Monday 1st of July 2013
It is to plug loopholes with the property purchase. People are using their names of their families members to get property loans to purchase their second/third etc properties.
Kyith
Monday 1st of July 2013
Ah I see thanks. So this will tighten such that the family member need to declare their income to purchase and not rely on the person
ken
Monday 1st of July 2013
From Goldman commentary on Singapore Banks: The Singapore banks we cover commented that TDSR threshold for them is currently in the range of 40-50%, below the MAS’ new threshold of 60%, and interest used to calculate TDSR does include some buffer over and above the current mortgage rate.
If that statistic is true, seems like its the government is just introducing it as a prudent measure? but no real impact yet?
B
Monday 1st of July 2013
The govt is doing the right thing in doing that. But as with all things, it is flawed. I think the govt is calculating monthly income by taking in only active income without including bonuses and passive income into it. So a person can earn 10k passive income/month with activr income of only 3k/month but still unable to buy a higher property value.
Is my understanding correct?
Kyith
Monday 1st of July 2013
We have to look at it in detail but yes. Then again what you sure citing is a non prevalent case.
But yes those that are rich in different ways will be penalized
PAP
Sunday 30th of June 2013
I believe PAP will still win the 2016 election.