Property investment demand feared to be 'shaven off' with tighter rules

What about the 'plugged loophole'?

According to Colliers International, the outlook for the private residential market has taken a relatively more cautious turn.

New rules from the Monetary Authority of Singapore (MAS) denote that banks must consider all of a borrower’s outstanding debt obligations – including loans for cars, renovations and credit cards when granting property loans.

Here's more from Colliers International:

Further, “guarantors” will have to be included as co-borrowers and stated as one of the purchasers on the option to purchase.

Particularly, banks will have to use the income-weighted average age of all co-borrowers based on their gross monthly income when applying the rules on loan tenure.

The new rules effectively plug the loophole that homebuyers have previously employed to purchase multiple properties while circumventing the original intent of the lower loan-to-value (LTV) ratio and ABSD, which have undermined the effectiveness of the cooling measures to some extent.

With the implementation of the new rules, investment demand may be shaven off with stricter financing regulations. The plugged loophole, reduced affordability and less flexibility in cash flows may also help to rein in prices that are at another new all-time high.