Government to tighten maximum loan quantum limits for home buyers

The government will tighten maximum loan quantum limits and introduce a 15 month wait-out period for private home owners buying Housing Board resale flats as part of new property cooling measures to promote sustainable property market conditions.

The loan-to-value limit for HDB loans will be lowered from 85 per cent to 80 per cent.

This was announced on Thursday September 29 by HDB, the Monetary Authority of Singapore MAS and the Ministry of National Development MND, slightly after 11.40 pm.

The agencies noted that market interest rates have risen significantly and are likely to increase further in the future, affecting borrowing costs for home purchases.

They said that in order to ensure prudent borrowing and to avoid future difficulties in servicing home loans, the Government will tighten the maximum loan quantum limits for housing loans.

In order to assess borrowers' repayment ability, higher interest rates will be assumed.

The measure will be a raise in the medium-term interest rate floor and the mortgage servicing ratio by 0.5 per cent, as well as introduce an interest rate floor of 3 per cent for the eligible loan amount for those granted by HDB.

The increased medium-term interest rate floor will apply to loans used to buy properties where the option to purchase is granted on or after Sep 30. If there is no option to purchase, it will apply when the date of sale and purchase agreement is on or after that date.