Singapore Tightens HDB Loan Limits, Introduces Enhanced Housing Grants for Affordability

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Tighter HDB Loan Limits and Enhanced Housing Grants: A Calibrated Approach in Singapore's Real Estate Landscape

Following the Prime Minister's National Day Rally speech on August 20th, the Government announced adjustments that med to stabilize Singapore's overheated housing market by tightening loan-to-value LTV limits for Housing and Development Board HDB loans. The maximum borrowing limit was reduced from 80 to 75.

To provide context, this move is part of a series of three rounds designed to mitigate the rising demand for HDB flats, with previous LTV reductions to 80 in February 2019 and then back to 75 in January 2023. With these latest changes, homebuyers seeking high- resale units will find their financial constrnts increasing.

To counterbalance this potential impact on affordability, the government has also introduced enhanced Housing Grants EHG for lower-to-middle-income families purchasing HDB flats directly from the Housing Development Board or through resale markets. Specifically:

• For a BTO flat priced at SGD 500,000 with an average monthly household income of SGD 5,000, the down payment is expected to increase by SGD 25,000 from SGD 100,000 to SGD 125,000 due to the reduced LTV limit. However, the maximum EHG grant of SGD 65,000 will more than offset this additional cost.

In essence, these strategies m to stabilize Singapore's real estate market by addressing concerns over potential overheating in resale markets while supporting affordability for lower-to-middle-income families looking into public housing options or upgrading their current living conditions. The government's measures ensure that the market remns sustnable and accessible to all segments of society, promoting economic stability alongside growth.

was initially published on CNA.

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This article is reproduced from: https://bizbeat.nus.edu.sg/thought-leadership/article/tighter-hdb-loan-limits-and-enhanced-housing-grants-come-together-in-a-calibrated-move/

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