SINGAPORE Feb 10 Singapore will broaden
exemptions from the debt limit for refinancing loans of home
owners, its central bank said on Monday, in its first tweak of
the policy introduced last June that was aimed at cooling down
the property market.
The city-state's private homes sales in December fell to a
five-year low, after the government broadened measures last year
to curb speculation that had driven home prices to record highs
fuelled by low interest rates.
Under the revised rules, a borrower will be exempted from
the 60 percent TDSR (Total Debt Servicing Ratio) threshold in
refinancing a residential property, so long as it was purchased
before the introduction of TDSR rules and it is owner-occupied,
the Monetary Authority of Singapore (MAS) said in a statement.
Previously, the exemption also required that the owner did
not own any other property, and had no other outstanding
The MAS said it had received feedback from borrowers facing
challenges refinancing loans for such properties.
"MAS has decided to broaden the existing exemption from the
TDSR threshold of 60 percent for such loans to ease the debt
servicing burden of these borrowers," it said.
The MAS announced the TDSR rules last June, limiting a
property buyer's monthly payment at 60 percent of his income.
In the last quarter of 2013, the price index for private
residential properties decreased by 0.9 percent from the
previous quarter, but still hovered near a record high hit in
the third quarter of that year, Urban Redevelopment Authority
Analysts said the policy change would help a fair number of
home owners seeking to refinance their properties, but did not
signal a shift in government policy on the property market.
"The revised rules would provide some relief for current
home owners who bought their homes before TDSR ruling, and are
genuinely seeking re-financing to ease their loan financing
burden," said Alice Tan, head of consultancy and research at
"Yet this exemption is not likely to create a boost in home
sales for now, as the TDSR threshold still remains for buyers
who bought homes and who are intending to purchase a property
after the effective date of TDSR."
The MAS will also allow borrowers whose loan tenures for
their owner-occupied residential properties exceed the current
regulatory limits to maintain the remaining tenures of their
loans at the point of refinancing, as long as these properties
were purchased before implementation of loan tenure limits.
In addition, the central bank will grant a transition period
until June 30, 2017, during which a borrower may refinance his
investment property loans above the 60 percent limit, if the
property was purchased before the introduction of TDSR rules,
and the borrower commits a debt reduction plan with the
financial institution and fulfills credit assessment.
(Reporting by Rujun Shen; Editing by Jacqueline Wong)