With the new MSR and the TDSR ruling, the economists are seeing the private home loan mortgage easier to apply than the HDB flat or an EC loan. The new TDSR ruling has affected much the property demand in Singapore. Since its implementation, the new ruling has dampened the real estate market. It has placed nuts and bolts in both the buyers and the sellers. It is this total servicing ratio that determines your dream home’s lifeline. Its calculation usually results to whether you can borrow enough funds or not having anything to borrow at all. If you are a borrower with many credit card usage, then you need to pay those first to get a bigger housing loan. The goal of the new ruling is to limit the amount that the bank is going to lend as well as regulate the loan exposure of the borrower. The monthly cap ruling is at least 60% of the borrower’s gross monthly income, which includes both secured and unsecured loans such as credit card limits.
The MSR affects the borrower in a way that it sets the monthly payment limit of the borrower, especially those buying the HDB flats and the ECs. The MSR is more keen on regulating the housing loans only, which is set not to be over the 30% of the borrower’s monthly income. The EC requires both the TDSR and EC when calculating monthly payment limits. However, this minimum requirement could be 50% higher than the private property housing loans. Borrowers should start understanding that the type and size of the real estate property they are planning to buy should comply with the TDSR and MSR ruling. The loan tenure is also affected as the banks now give only maximum 25 years for an HDB unit. There is a remarkable difference between the loan to value of the HDB unit and the private property. Considering the HDB gives an 80% loan to value, the private property could offer another 5% minimum loan income to obtain an 80% loan to value of the property. For example, a purchase price of $625,000 would allow only a loan amount of about $500,000. If the EC property costs $1,000,000 then the minimum income should be $11,977 monthly. Other loan commitments are to be deducted. The result would be a lower housing loan amount. Existing property loans would be subject to the same calculations for repricing or refinancing upon maturity. Borrowers with high loan commitment that were enjoying the previous ruling might find difficulty getting refinancing. Owner occupied HDB and ECs may not be included in the MSR refinancing calculations.