MAS imposes 35 year limit on the tenure of all loans for residential property
Posted by temasektimes on October 5, 2012
In a desperate move to cooling the red hot property market, the Monetary Authority of Singapore (MAS) will restrict the tenure of loans granted by financial institutions for the purchase of residential properties, effective from 6 October.
The new rules impose an absolute limit of 35 years on the tenure of all loans for residential property. Currently, lenders are allowed to borrow up to 40 years for their housing loans.
In addition, loans exceeding 30 years’ tenure will face significantly tighter loan-to-value (LTV) limits.
For these loans, the LTV limit will be: 40% for a borrower with one or more outstanding residential property loans; and 60% for a borrower with no outstanding residential property loan.
The prices of Singapore properties have sky-rocketed in recent years due to the relentless influx of cash-rich foreigners, mostly from neighboring countries like China, India and Indonesia.
The move may have the unwanted effect of forcing buyers to switch from private properties to resale HDB flats, thereby contributing to further price increase.