Guess who'll be badly hit by Singapore's property loan rules

Buyers must brace for tougher financing rules.

According to Savills, the existing LTV rules are refined to reflect the true borrowers of the loan as well as to apply a new income-weighted average age of joint borrowers when calculating the loan tenure. 

This will adversely affect those buyers hoping to benefit from longer loan tenures by obtaining the loan jointly with a younger applicant and multiple-property buyers hoping to benefit from higher LTV ratios with a joint applicant buying for the first time.

Here's more from Savills:

Taking another step to instil financial prudence and minimise property buyers’ risks of overexposure due to easy financing, the MAS on 29 June 2013 introduced the TDSR and tightened rules relating to the existing LTV limits.

When assessing a property loan (new or refinancing), financial institutions are now required to take into account the borrowers’ monthly repayments of all outstanding debt obligations over monthly gross income so that the TDSR does not exceed 60%.

For property loans, a higher notional market interest rate or 3.5% for housing loans (4.5% for non-residential loans) will be applied to determine the monthly loan repayment.

Moreover, a 30% haircut of all variable incomes and rental incomes will be applied in assessing the TDSR threshold. This affects commissioned/bonus-based sales people, selfemployed individuals and investors.