05-10-2012, 06:45 PM
News fresh from the oven! Not really a property curb in the strict sense, but it's more of targetting the borrowers and how much they can borrow. Now maximum is 35 years and not some ridiculous tenure like 50 years!
The Straits Times
www.straitstimes.com
Published on Oct 05, 2012
Government caps tenure of residential loans at 35 years
By Daryl Chin
IN a bold move to avoid a property bubble, the Government has capped all new loans for residential properties at 35 years, starting tomorrow.
In a statement released on Friday, the Monetary Authority of Singapore also said loans exceeding 30 years will face a tighter loan-to-value limits.
Homeowners can only borrow 40 per cent of the property's valuation should they have an outstanding mortgage, and 60 per cent if they do not.
This rule also applies to those whose loan period extends beyond the retirement age of 65.
Explaining the move, MAS said this was part of the Government's broader aim of avoiding a price bubble and fostering long term stability in the property market.
"The new rules aim to curb continued upward pressure on residential property prices, driven by low interest rates and rapid credit growth. Previous rounds of Government measures have had a moderating effect on residential property prices," it said.
Flash estimates in both the private and public resale market have reached record highs.
Property demand is likely to continue given low interest rates, which will spur prices beyond "sustainable levels".
"The eventual correction could be painful to borrowers and destabilise the economy," it said.
Meanwhile, the agency has also sat up and taken note of some worrying trends. Financial institutions like banks have been lengthening their tenures -some as long as 50 years - for residential properties.
Over the last three years, the average tenure for new residential property loans has increased from 25 to 29 years. More than 45 per cent of new residential property loans exceed 30 years.
"Long tenure loans pose risks to both lenders and borrowers. The lower initial monthly repayments, made possible by long loan tenures and the current low interest rates, may lead borrowers to over-estimate their ability to service the loans, and take a bigger loan than they can really afford."
The Straits Times
www.straitstimes.com
Published on Oct 05, 2012
Government caps tenure of residential loans at 35 years
By Daryl Chin
IN a bold move to avoid a property bubble, the Government has capped all new loans for residential properties at 35 years, starting tomorrow.
In a statement released on Friday, the Monetary Authority of Singapore also said loans exceeding 30 years will face a tighter loan-to-value limits.
Homeowners can only borrow 40 per cent of the property's valuation should they have an outstanding mortgage, and 60 per cent if they do not.
This rule also applies to those whose loan period extends beyond the retirement age of 65.
Explaining the move, MAS said this was part of the Government's broader aim of avoiding a price bubble and fostering long term stability in the property market.
"The new rules aim to curb continued upward pressure on residential property prices, driven by low interest rates and rapid credit growth. Previous rounds of Government measures have had a moderating effect on residential property prices," it said.
Flash estimates in both the private and public resale market have reached record highs.
Property demand is likely to continue given low interest rates, which will spur prices beyond "sustainable levels".
"The eventual correction could be painful to borrowers and destabilise the economy," it said.
Meanwhile, the agency has also sat up and taken note of some worrying trends. Financial institutions like banks have been lengthening their tenures -some as long as 50 years - for residential properties.
Over the last three years, the average tenure for new residential property loans has increased from 25 to 29 years. More than 45 per cent of new residential property loans exceed 30 years.
"Long tenure loans pose risks to both lenders and borrowers. The lower initial monthly repayments, made possible by long loan tenures and the current low interest rates, may lead borrowers to over-estimate their ability to service the loans, and take a bigger loan than they can really afford."
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