TheHouseSale.Info

The one stop portal for all your Singapore property info

How Singapore’s Latest HDB Cooling Measures Affect You

Affordable housing is a big ticket issue right now. And when our government tackles a problem, they do it with a uniquely Singaporean slant: That is, the unshakeable conviction that anything worth doing is worth overdoing. Enter the latest HDB Cooling Measures:

 

“Hello, what you want? Clothes? Camera? Watch? HDB resale flat?”

“Hello, what you want? Clothes? Camera? Watch? HDB resale flat?”

 

What are the Latest HDB Cooling Measures?

  • Reduction of the Mortgage Servicing Ratio (MSR) from 35% to 30% for HDB Concessionary Loans
  • Reduction of the maximum loan tenure from 30 to 25 years for HDB flats; and 35 to 30 years for bank loans.
  • 3 year increased wait time for Permanent Residents (PRs)

Here’s a quickie explanation:

 

 1. Reduction of the MSR to 30% 

The MSR measures the percentage of your income that would go toward repaying your home loan monthly.

In the past, HDB buyers had a MSR of 35%. So if you had an income of $2,500, your MSR would have been (35% of $2,500) = $875.

That means the maximum allowable repayment on your home loan, every month, would have been $875. The loan amount granted to you will be calculated based on this amount.

With the MSR now lowered to 30%, your maximum allowable repayment (again on a $2,500 income) would be a paltry $750. Which means the loan amount granted to you will be reduced accordingly. Yeah, you may have to shelve those upgrading plans for now.

Incidentally, the MSR for HDB Concessionary Loans are now similar to bank loans: Both are at 30%.

If the new MSR just wrecked your home loan approval, Ask any bankers for help. The mortgage specialists there can figure something out. It’s free, so long as we keep shoving them stale bread under the cellar door.

 

“Why, what gives you the idea home buyers are desperate?”

“Why, what gives you the idea home buyers are desperate?”

 

 2. Reduction of Maximum Loan Tenure  

The maximum loan tenure* is now set to 25 years for HDB Concessionary Loans and 30 years for bank loans.

*The time before a loan is repaid in full

A 30 year loan tenure with a bank loan will however only grant you 60% of the purchase price. If you need the full 80%, the maximum loan tenure you can take is 25 years, which is the same as the HDB Concessionary Loan.

A shorter loan tenure means higher monthly repayments for the same loan amount. Combined with the lower MSR, this means home buyers in general will be borrowing much less.

While that sucks, it does mean fewer Singaporeans will be over-leveraged. This should brace us for potential liquidity crunches, once the Americans change their fiscal policy.

 

 3. Increased Wait Time for PRs 

 

On the plus side, pets aren’t a problem.

 

This is perhaps the biggest, most significant change. Previously, someone could buy a resale flat as soon as they got their PR status. It was a major contributor to rising resale flat prices, and sudden paranoid xenophobia. Now, a 3-year waiting period has been implemented.

The new restriction means some PRs will now have to rent (unless they can afford other private property). That’s good news for landlords, and for flat owners who have started letting out rooms.

If you have a sizeable 4-room or 5-room, now may be the time to keep an eye on the rental market.

 

 A Message to Property Investors? 

 

After the latest cooling measure, the Loan Applications Department was never the same.

 

Resale flat prices were already plummeting, even before this cooling measure. Just yesterday (26th August 2013) we heard that zero COV flat sales , from 14 in January to 49 in July.

(A zero CoV sale means the seller was only paid the actual valuation of the flat).

The new cooling measure makes it worse. Expect the resale market to contract, like a well salted slug, because PRs made up a significant part of the market. Now the new arrivals won’t be able to buy for three years, even if they had the cash.

The message to property developers is clear:

HDB flats are for housing first, and investment second.

The government isn’t going to temper its policies to cushion investors, so don’t count on resale flats prices hitting the dizzying heights they did a few years back.

Views: 270

Attachments:

Reply to This

Replies to This Discussion

Reply to Discussion

RSS

Badge

Loading…

Notes

Hdb to Pte avoid ABSD issue

Created by Geoffery Ho Feb 14, 2019 at 10:18pm. Last updated by Geoffery Ho Feb 14.

The Troubling Implications of Owning a 40-Year old HDB Flat

Created by Geoffery Ho Feb 14, 2019 at 9:21pm. Last updated by Geoffery Ho Feb 14.

HDB Industrial New Policies - 1st June 2015

Created by Geoffery Ho Jul 22, 2015 at 12:53pm. Last updated by Geoffery Ho Jul 22, 2015.

What you should know about ECs

Created by Geoffery Ho Oct 1, 2014 at 11:34am. Last updated by Geoffery Ho Oct 1, 2014.

8 Things You Should Know When Using CPF for Property

Created by Geoffery Ho Aug 19, 2014 at 9:32pm. Last updated by Geoffery Ho Aug 19, 2014.

Eligibility to Buy PTE or HDB

Created by Geoffery Ho Jun 6, 2011 at 7:03pm. Last updated by Geoffery Ho Aug 18, 2014.

Can Private Property Owners (Local or Overseas) buy HDB Flat (New or Resale)?

Created by Geoffery Ho Jun 3, 2014 at 9:21pm. Last updated by Geoffery Ho Jun 3, 2014.

CPF property rules: 4 things you may not know

Created by Geoffery Ho Aug 2, 2009 at 11:15pm. Last updated by Geoffery Ho May 8, 2014.

Thinking Of A Career With Us?

Created by Geoffery Ho Jun 29, 2009 at 10:54pm. Last updated by Geoffery Ho May 7, 2014.

HDB & PTE : Online e-Services & Utilities Application

Created by Geoffery Ho Oct 21, 2009 at 11:53pm. Last updated by Geoffery Ho Apr 13, 2014.

Progessive vs Deferrment Payment Charts

Created by Geoffery Ho Feb 8, 2014 at 1:38am. Last updated by Geoffery Ho Feb 8, 2014.

Can You Trust Your Property Agent in Singapore? Take these 5 Steps to Confidence!

Created by Geoffery Ho Nov 11, 2013 at 11:31pm. Last updated by Geoffery Ho Nov 11, 2013.

Commission GuideLines

Created by Geoffery Ho Sep 21, 2013 at 10:58pm. Last updated by Geoffery Ho Sep 21, 2013.

Total Debt Servicing Ratio (TDSR) and How It Affects Your Loans

Created by Geoffery Ho Aug 26, 2013 at 11:27pm. Last updated by Geoffery Ho Sep 14, 2013.

Banks' Home Loan Comparison & Mortgage Calculators

Created by Geoffery Ho Oct 14, 2008 at 1:05pm. Last updated by Geoffery Ho Apr 16, 2013.

Financing A Commercial Property

Created by Geoffery Ho Apr 16, 2013 at 12:12am. Last updated by Geoffery Ho Apr 16, 2013.

URA Guidelines On Retail Unit Size & Corridor Width

Created by Geoffery Ho Apr 8, 2013 at 12:25am. Last updated by Geoffery Ho Apr 8, 2013.

THE HOUSING LOAN INFO & TIPS

Created by Geoffery Ho Sep 18, 2008 at 1:26am. Last updated by Geoffery Ho Mar 31, 2013.

Type Of Property & EC in Singapore

Created by Geoffery Ho Mar 11, 2013 at 10:00pm. Last updated by Geoffery Ho Mar 11, 2013.

Forum

Draft Master Plan - West Economy

Started by Geoffery Ho in Information May 7, 2014.

CPF FOR PURCHASE OF HDB FLATS LESS THAN 60 YEARS 2 Replies

Started by Geoffery Ho in Information. Last reply by Geoffery Ho Apr 13, 2014.

How Singapore’s Latest HDB Cooling Measures Affect You 1 Reply

Started by Geoffery Ho in Information. Last reply by Geoffery Ho Oct 8, 2013.

HDB flat sellers left in tight spot by new rules

Started by Geoffery Ho in Question Aug 29, 2013.

Watch the wording in 'offer to purchase' letter

Started by Geoffery Ho in Others Aug 14, 2013.

Why Singapore's property continues to rise...

Started by Geoffery Ho in Question Apr 16, 2013.

3 SMARTER WAYS TO SAVE INTEREST ON MORTGAGE

Started by Geoffery Ho in Information Apr 16, 2013.

Feng Shui Tips to Revitalize Your Home 2 Replies

Started by Geoffery Ho in Leisure. Last reply by Geoffery Ho Sep 29, 2012.

3 Lessons From the Sky Habitat Sale

Started by Varchel in Information Sep 17, 2012.

FAQs 3 Replies

Started by Geoffery Ho in Question. Last reply by Geoffery Ho Jul 12, 2012.

99-Year vs Freehold

Started by Geoffery Ho in Information. Last reply by Geoffery Ho Sep 21, 2010.

THIS WEEK'S TOPIC: Keeping speculators at bay 8 Replies

Started by Geoffery Ho in Question. Last reply by Geoffery Ho Sep 14, 2010.

Potential Growth Areas (Residential) - Where to buy?

Started by Geoffery Ho in Others Mar 23, 2010.

How to avoid conflict in real estate transaction 2 Replies

Started by Geoffery Ho in Others. Last reply by Geoffery Ho Nov 9, 2009.

© 2019   Created by Geoffery Ho.   Powered by

Badges  |  Report an Issue  |  Terms of Service