35-year limit set on home loans

[corydorus]

Because the interests have been so low, the leverage has been at it's greatest multiples. A slight spike says just 3% may means 3 times current monthly payment. Within 6 months, it can wipe out many savings. So my take is property value will dropped adversely.

Another potential timeline bomb building on top of it is when bank board rate becomes effective on new loans.

[CityFarmer]

...

For existing players they are pretty much unaffected. Only those thinking of adding to their properties would have to reconsider. On balance I think the measures are pretty calibrated against a segment of buyers - consistent with how they have done their measures in the past.

For existing players, the new rule applies upon refinancing. Refinancing is another mean to ensure lowest interest

Existing players have to live with existing bank and interest, even interest remain low or even lower in near future

[Musicwhiz]

I spoke to several friends about this topic yesterday.

The problems may not be apparent now, but will affect those who need to refinance.

So if you need to refinance next year (if not you may end up paying 3% when the whole Singapore is paying 1%, which makes you look dumb), then the new rules kick in and you either have to cough up a larger amount upfront or higher installment payments as the loan tenure gets reduced.

There is a possibility of avoiding that though. Article says LTV ratio - so if VALUE of property goes up enough to offset the lower LTV, then it may balance out for the purchaser.

[CityFarmer]

I spoke to several friends about this topic yesterday.

The problems may not be apparent now, but will affect those who need to refinance.

So if you need to refinance next year (if not you may end up paying 3% when the whole Singapore is paying 1%, which makes you look dumb), then the new rules kick in and you either have to cough up a larger amount upfront or higher installment payments as the loan tenure gets reduced.

There is a possibility of avoiding that though. Article says LTV ratio - so if VALUE of property goes up enough to offset the lower LTV, then it may balance out for the purchaser.

To refinance, the value used for LTV will stay as purchase price or new value upon revaluation? The valuation fee is born by bank?

Never thought of it. Will find out. Anyone to shed some light ?

[cfa]

Many property veterans feel this is not going to affect the overall market . Many buyers from China , India, Malaysia, etc. are coming with huge cash. The impact is on local smalltime speculators.

[Musicwhiz]

Valuation would be at the point of refinancing, and yes it is done by the banks who will engage an independent valuer (Colliers or Knight Frank etc.).

And yes I do agree it will not affect cash-rich people. The measures are targetted at those who are over-stretching themselves financially by taking up loans with long tenures.

[CityFarmer]

Many property veterans feel this is not going to affect the overall market . Many buyers from China , India, Malaysia, etc. are coming with huge cash. The impact is on local smalltime speculators.

The risk is on those with huge loan, rather than those with huge cash

[hyom]

I spoke to several friends about this topic yesterday.

The problems may not be apparent now, but will affect those who need to refinance.

So if you need to refinance next year (if not you may end up paying 3% when the whole Singapore is paying 1%, which makes you look dumb), then the new rules kick in and you either have to cough up a larger amount upfront or higher installment payments as the loan tenure gets reduced.

There is a possibility of avoiding that though. Article says LTV ratio - so if VALUE of property goes up enough to offset the lower LTV, then it may balance out for the purchaser.

Existing property owners with long tenure loans will have to refinance with a shorter tenure loans. If they cannot afford the higher monthly debt payments, then they will have to force-sell their properties. Questions are ... how large is this group? When do they need to refinance? These will determine the timing and pressure of the force-selling on the property market.

Anyone have friends who belong to this group?

[weijian]

Many property veterans feel this is not going to affect the overall market . Many buyers from China , India, Malaysia, etc. are coming with huge cash. The impact is on local smalltime speculators.

Wasn't the previous round of cooling (ABSD for foreigners) supposed to target this group of buyers? As a result of that cooling round, IIRC, mass market/outside core region seem to have risen at a faster pace than core region. Therefore logically, this current round is specifically targeted at the uncle/wanna-be trying their hand on mass market properties.

[CityFarmer]

I spoke to several friends about this topic yesterday.

The problems may not be apparent now, but will affect those who need to refinance.

So if you need to refinance next year (if not you may end up paying 3% when the whole Singapore is paying 1%, which makes you look dumb), then the new rules kick in and you either have to cough up a larger amount upfront or higher installment payments as the loan tenure gets reduced.

There is a possibility of avoiding that though. Article says LTV ratio - so if VALUE of property goes up enough to offset the lower LTV, then it may balance out for the purchaser.

Existing property owners with long tenure loans will have to refinance with a shorter tenure loans. If they cannot afford the higher monthly debt payments, then they will have to force-sell their properties. Questions are ... how large is this group? When do they need to refinance? These will determine the timing and pressure of the force-selling on the property market.

Anyone have friends who belong to this group?

The highest monthly payment occur during the 3rd year of loan, i.e. in 2014/15. That is also the peak in properties supply