Latest Housing Rules Singapore | Housing Loans Regulations Singapore

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Lower loan ceilings and debt ratios, as well as higher extra levies, have been implemented while Singapore’s property market remains hot. Here’s how these changes might affect homebuyers in the future. Singapore’s residential real estate market has proved surprisingly robust in the face of a multi-year pandemic. In this blog, we tell you about the latest housing rules in Singapore. 

According to the Monetary Authority of Singapore, house and residential property prices continue to remain strong,’ necessitating changes to existing cooling measures in an effort to further rein in the property market. These changes, which revolve around housing loan laws, went into force late last year and will affect prospective purchasers in a variety of ways. We’ll look at how Singapore’s house loan requirements have changed and how they can affect you.

Related – Home Loans in Singapore 

Latest Housing Rules Singapore

Singaporeans:

An additional 5% for a second residential property, and a 10% increase for a third and subsequent property. If you are a state resident purchasing your first residential property, you will (still) be exempt from paying ABSD. This remains the same as previously.

Purchasing a second residential property, on the other hand, will now incur an ABSD of 17 percent, a five-percentage-point increase over the previous rate of 12 percent. The increase is significantly greater for third and subsequent homes – 10 percentage points. This means you’ll have to pay ABSD of 25% instead of the previous rate of 15%.

Permanent Residents:

Additional ABSD of 10% to 15% for residential properties beyond the first Permanent Residents (PRs) wishing to buy their first residential property will face an ABSD of 5%, unchanged from before.

However, further ABSD applies to subsequent properties. The rate rises to 25% (from 15% previously) for their second residential property and 30% (from 15% previously) for their third and subsequent residential properties.

Foreigners:

An additional 10% ABSD throughout the board. Foreigners trying to purchase residential property in Singapore have been hurt the hardest by the new regulations. They will now have to pay ABSD of 30% of the property’s value, whether it is their first or tenth residential property. Previously, the ABSD applicable to international buyers was 20%.

Total Debt Servicing Ratio Reduced (TDSR)

Another significant thing to note is the reduction in the Total Debt Servicing Ratio (TDSR), which is a strategy implemented to reduce household debt on the island. It considers all sources of debt, including your mortgage payments, education loans, vehicle loans, personal loans, credit card debt, and other unsecured loans.

If your total monthly payments to all of your debt obligations surpass the current TDSR rate, you may have difficulty obtaining additional loans. (However, keep in mind that this is only a guideline, and it is up to the issuing financial institution’s judgement whether to actually grant you more money.)

New mortgage loans shall not lead the applicant’s TDSR to surpass 55 percent under the updated regulations. This maximum has been reduced from 60 percent previously, which means you may have to pay off some debt before your mortgage may be approved.

However, if you want to refinance an existing mortgage that was authorised before December 16, 2021, the prior TDSR ceiling of 60% still applies. Protect your house with one of our home insurance policies.

Reduced Loan-to-Value (LTV) ratio for HDB housing loans – Latest Housing Rules Singapore

The new laws have also had an impact on the Loan-to-Value ratio, however this only applies to HDB home loans. The maximum borrowing amount on your HDB mortgage is now 85 percent of the property’s valuation. This is a five-point decrease from the prior figure of up to 90 percent.

This means that homebuyers will need to save more money and/or use their CPF savings to make up for the extra 5%. The LTV remains the same for mortgages given by other financial institutions, at a maximum of 75 percent of the property’s value.

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