Singapore's MAS Regulates New Housing Loans: MSR, TDSR, and LTV Guidelines

Introduction

provides an overview of the rules for new housing loans under the Monetary Authority of Singapore MAS, applicable to financial institutions operating in Singapore such as full banks, merchant banks, and finance companies. It covers essential aspects including borrower-mortgagor requirements, deducting discounts or rebates, loan tenure limits, and the mortgage servicing ratio MSR and total debt servicing ratio TDSR rules that borrowers must adhere to.

Property Loans Requirements

MAS enforces regulations on property loans to ensure responsible ling practices. This includes setting thresholds for both mortgage servicing ratios MSR and total debt servicing ratios TDSR. These rules apply specifically to housing loans used for purchasing Housing Development Board HDB flats or executive condominiums where the occupation period has not yet expired.

Borrower-Mortgagor and Guarantor-Borrower Guidelines

The financial institutions must ensure that the borrowers comply with the MSR and TDSR limits. These ratios help assess a borrower’s affordability based on their gross monthly income GMI.

Deducting Discounts, Rebates or Benefits

When considering loan applications, discounts, rebates, or benefits offered by property developers must not lead to MSR exceeding the cap or TDSR surpassing 55. The goal is to ensure that borrowers remn financially manageable under various economic conditions.

Loan Tenure and Loan-to-Value Limits

For housing loans, a maximum loan tenure of up to thirty years applies. Additionally, there's a specified loan-to-value LTV limit set by MAS to prevent over-leverage risks.

Mortgage Servicing Ratio MSR

The MSR is the proportion of GMI that goes towards repaying monthly obligations on property loans, including any new loan application. For housing loans med at purchasing an HDB flat or executive condominiums with no expiration on occupation periods, MSR should not exceed 30.

Calculation Example:

To calculate MSR for a borrower:

1. Sum up the monthly repayment instalments of all existing property loans.

2. Add at least 20 of the monthly debt obligation associated with any loan where the borrower is acting as a guarantor.

Then use this formula:

leftfractextMonthly Repayment Instalments for All Property Loans + text20 of Monthly Debt Obligation if guarantor textGross Monthly Incomeright times 100leq30

Total Debt Servicing Ratio TDSR

The TDSR encompasses not only property loans but also all other monthly debt obligations, including the new loan application. It should not exceed 55 for borrowers.

For detled guidelines on calculating TDSR, please refer to the MAS website or contact your financial institution directly.

Compliance with these regulations ensures a healthy and stable housing market by preventing over-indebtedness among homeowners. Financial institutions must ensure that borrowers understand and abide by these rules to mntn financial stability for themselves as well as the broader economy.

This article is reproduced from: https://www.mas.gov.sg/regulation/explainers/new-housing-loans/msr-and-tdsr-rules

Please indicate when reprinting from: https://www.669t.com/loan_limit/MAS_Housing_Loan_Rules_Overview.html