Tag Archives: Monetary Authority of Singapore

Refining the Executive Condominium Housing Scheme


Refining the Executive Condominium Housing Scheme
09 Dec 2013 07:30 PM
The Government will implement three measures for Executive Condominium (EC) developments to bring the terms for ECs closer to that for public housing, and help support a stable and sustainable EC market. This follows a review by MND on the EC Housing Scheme, taking into account feedback from the Our Singapore Conversation on Housing.

I. Reduce EC Cancellation Fees

2   First, we will reduce the cancellation fees for ECs from 20% to 5% of the purchase price. This will relieve the financial burden of buyers who have to cancel their EC bookings after signing the Sale & Purchase Agreement. The new cancellation fee will be applied to EC land sales which are launched on or after 9 Dec 2013, including those where the tenders have not closed.

3   The cancellation fee for ECs is currently set at 20% of the purchase price, similar to those for private housing. However, unlike buyers of private housing, buyers of EC units cannot sub-sell their units if they cannot complete their purchase, and have to pay the cancellation fee. This has especially imposed significant financial burden on young couples who subsequently are not able to proceed with their marriage and hence the EC purchase.

4   We will therefore align the cancellation fees for EC units with that for HDB Build-to-Order (BTO) flats, and reduce them from 20% to 5% of the purchase price.

II. Resale Levy for Second-Timer Applicants

5   Second, we will now require second-timer applicants who buy EC units directly from property developers to pay a resale levy, similar to second-timer applicants who buy BTO flats. The new requirement will be applied to EC land sales which are launched on or after 9 Dec 2013, including those where the tenders have not closed.

6   Currently, second-timer applicants who buy EC units directly from property developers benefit from the lower EC prices arising from the initial eligibility and ownership restrictions imposed on EC purchases. However, they do not need to pay a resale levy. The alignment of treatment with second-timer applicants who buy BTO flats will ensure greater parity.

III. Revision of Mortgage Loan Terms

7   Third, the Monetary Authority of Singapore (MAS) will cap the Mortgage Servicing Ratio (MSR) for housing loans granted by financial institutions for EC units bought directly from property developers at 30% of a borrower’s gross monthly income. This is in line with earlier measures introduced by the HDB and MAS to encourage financial prudence among buyers of public housing. It discourages EC buyers from over-stretching their finances and supports an affordable and sustainable EC market.

8   The 30% MSR cap will apply to EC purchases where the Option to Purchase is granted on or after 10 Dec 2013.1


9   For further enquiries on any of the above measures, the public can contact the HDB Sales Customer Service Line: 1800-866-3066.

Issued by: Ministry of National Development
Date 9 Dec 2013


 Source - MND Singapore

Cooling measures – Maximum tenure for HDB housing loans cut to 25 years

THE BUSINESSTIMES – THE Singapore government will reduce the maximum tenure for public housing loans to 25 years from 30 years  in a series of measures to stabilise the resale market.

Cooling measures

Cooling measures

The mortgage servicing ratio limit will also be reduced from 35 per cent to 30 per cent of the borrower’s gross monthly income, the Ministry of National Development and the Housing & Development Board said in a statement on Tuesday, 27/8/2013.

“These measures are in line with those introduced by the Monetary Authority of Singapore (MAS) to encourage financial prudence among borrowers, which is especially important given that the current low interest rate environment is unlikely to be sustained,” according to the statement. < VERY BIG HINT that interest rate is going up soon. >

The MAS will reduce the maximum tenure of new housing loans and refinancing facilities granted by financial institutions for the purchase of HDB flats (including DBSS flats) to 30 years from 35 years. New loans with tenures exceeding 25 years and up to 30 years will be subject to tighter loan-to-value limits

Still can’t figure out how much it affect HDB buyers? Let’s take an example of a couple having a HDB loan of $400,000 for 30 years at a interest rate of 2.6%. Their current monthly installment will be around S$ 1,601.36.  But with the new cooling measures, buyer can only take a maximum of 25 years public housing loan instead of 30 years, their monthly installment will be S$ 1,814.68 instead. An $213.32 or 13% increase in monthly installment. Well the $213.32 is enough to pay for your monthly utilities bill. 

Meanwhile, with immediate effect , Permanent Residents (PR) who want to buy resale HDB flats will have to wait three years after receiving their PR status. Prior to this change, they could buy a flat as soon as they received PR status. This is indeed a big blow for PR holder. Will this measures push new PR holders to go to private residential market? Hmm , we shall see.

What’s very sure is that the HDB resale market will be damn COOL this 2 months due to the knee jerk effect.

Source – http://www.businesstimes.com.sg/breaking-news/singapore/maximum-tenure-hdb-housing-loans-cut-25-years-20130827


Interest rate rise ‘could hurt many households’

MORE than 9,000 households in Singapore may have trouble paying off their mortgages when interest rates rise, a new report warns.

Debts 1Analysts from Religare Institutional Research made this calculation based on the statement by the Monetary Authority of Singapore on Tuesday.

MAS had said that 5 to 10 per cent of borrowers here have probably overstretched themselves on their property purchases. That is, their total debt servicing payments, including those for their home, car and other loans, amount to more than 60 per cent of their income.

If mortgage rates were to rise by 3 percentage points, the proportion of borrowers at risk could reach 10 to 15 per cent, the MAS said.

The central bank had also pointed out that the vast majority of mortgage loans here are on floating-rate packages, so many households will face higher monthly repayments when interest rates rise.

Religare noted in its report yesterday that there are 90,000 new homes coming onto the market from now to 2016.

This “means over 9,000 troubled units could be on the market”, it said.

“That is more than half a year of new home supply and over 3 to 4 per cent of total private housing units.”Debts

Another worrying statistic, Religare said, is that only 70 per cent of existing property loans are for owner-occupied homes. This shows that investor demand in private homes is running quite high, the analysts wrote. “A little wobble in prices, combined with higher interest rates, might shake up a few property investors as well and add to the possible troubled units on the market.”

MAS deputy managing director Teo Swee Lian had said at the release of the MAS annual report on Tuesday that there is a much lower chance of a default if a loan is for an owner-occupied home.

Sourced from – http://www.stproperty.sg

June new home sales up 24%


Sales of new private homes jumped 24% in June to 1,806 units from the previous month. The 738-unit J Gateway contributed 40.8% of sales last month, with 737 units sold within the first day of preview on June 28 at a median price of $1,486 psf. The other best-seller was the 616-unit Jewel @ Buangkok, which saw 282 units sold last month at a median price of $1,182 psf. This was launched 1 day before the Monetary Authority of Singapore (MAS)  introduced the Total Debt Servicing Ratio (TDSR) framework

Despite the seventh round of cooling measures introduced on Jan 11, developers chalked up total sales of 10,061 (excluding executive condominiums) in 1H2013, or an average of 1,692 units a month. Property consultants and analysts expect monthly sales to decline in July, partly as a result of the introduction at end-June of a total debt servicing ratio, which is to be capped at 60% of a property buyer’s monthly income. Chia Siew Chuin, Colliers International’s research & advisory director, forecasts July’s sales to be around 1,000 units, “before recovering in the following months”.

Original article – 

June new home sales up 24%
Monday, 22 July 2013

© 2013 – The Edge Singapore

Singapore property market will ‘stay healthy’

price-growthThere will probably be a correction in property market prices but a crash is unlikely, said OCBC Bank’s chief executive officer, Mr Samuel Tsien.

Part of the reason for its resilience is because the Singapore market holds a certain appeal to investors, he said.

Still, rising interest rates and cooling measures will have an impact, Mr Tsien told The Straits Times at the sidelines of a major China forum at the Shangri-La Hotel yesterday.

“As a result of the different measures imposed by the Government in making sure that speculative demand has been removed, there will be a slowdown in market activities,” said Mr Tsien.

“I don’t think there will be a crash in the market. There will be some downward adjustment to prices but that is healthy in the long term.”

The Government has instituted seven rounds of property cooling measures since 2009, with the latest round in January.

Other moves aimed at reducing the froth in the markets include lowering limits on loans and raising stamp duties.

The measures have worked to stabilise prices.

In the three months to June 30, prices for mass-market apartments rose 3 per from the previous quarter.

But prices of homes in the city centre dropped 0.2 per cent in the second quarter, after growing 0.6 per cent in the first.

More recently, the central bank put new curbs on loans to prevent borrowers from becoming over-leveraged.

The outlook for interest rates is that they will likely rise in the next two years.

The United States Federal Reserve has indicated that it will start to slow the pace of its monetary stimulus programme and eventually raise interest rates.

The normalisation of rates will help OCBC, said Mr Tsien.

He also feels that the bank, as well as others, will benefit from normalising interest rates, as “it’s going to be beneficial to banks with a significant amount of Casa (current account, savings account) balances”.

This is true for OCBC, as its “Casa balances represent about 51 per cent of our total deposits”.

Casa accounts combine savings and checking accounts to encourage consumers to save with banks.

A higher Casa ratio would mean that a bank has access to a cheaper source of funds, because it pays out less interest on Casa and can lend at a higher rate.

“That will benefit OCBC Bank because lower-yielding deposits or zero interest rate deposits will be able to make some money as a result of the rising interest rates, by lending that money out to the market.”

Mr Tsien also took questions over the bank’s risk management practices, especially regarding the interest rate setting processes.

Last month, OCBC was among the banks here to be censured by the Monetary Authority of Singapore (MAS), and most were told to set aside extra funds to be parked at MAS at zero interest rates.

The amount that OCBC Bank has to deposit as additional reserves is between $700 million and $800 million.

Mr Tsien said that the impact is not significant, as it relates to the opportunity to earn interest on the amount.

He added that the bank has introduced a series of new checks to tighten the rates submissions process.

Sourced from : http://business.asiaone.com/news/singapore-property-market-will-stay-healthy

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