MAS Notice 632 Residential Property Loan &

MAS Notice 645 Total Debt Servicing Ratio With effect from 10 December 2013, Tuesday

For external presentation

1 Updated on 9 December 2013

Summary of Property Cooling Measures

2

ABSD: PRs 1st property (5%) & Singaporeans 2nd property (7%). PRs 2nd property & Singaporeans 3rd property at 10%. Foreigners & companies 15%.

LTV: 50% with 1 o/s HL (30% if tenure > 30 years or loan past age 65). 40% with 2 o/s HL (20% if tenure > 30 years or loan past age 65). Corporates LTV from 40% to 20%.

Min Cash Down Payment: No o/s HL: No change, i.e. 5% and 10% if tenure > 30 years or loan extends past age 65.

1 o/s HL: 25% ( from 10%).

Mortgage Service Ratio for HDB loan for purchase & refinancing: 30% of borrowers gross monthly income.

Interest absorption scheme (IAS) removed

Government Land Sale programme reinstated

Max loan-to-value (LTV) limit from 90% to 80%

Sellers stamp duty (SSD) levied on sale of private residential

property within 1 year of purchase

SSD holding period increased to 3 yrs (full SSD if sold within 1st year, 2/3 SSD if sold within 2nd year

& 1/3 SSD if sold within 3rd year)

For buyers with o/s HL, min cash down -payment increased

from 5% to 10% of valuation

limit & LTV from 80% to 70%

Min. occupation period of non-subsidised HDB flats from 3 to 5 years (resale & subletting

restriction)

SSD holding period to 4 yrs & rates chargeable changed to

16%, 12%, 8% & 4%

LTV 60% for individual borrowers with at least 1 o/s HL

LTV 50% for companies

14 Sep 2009

20 Feb 2010

30 Aug 2010

14 Jan 2011

6 Oct 2012

Additional Buyers Stamp Duty

+ 10% for foreigners & companies

+ 3% for PRs 2nd property

+ 3% for Singaporeans 3rd property above existing Buyers Stamp Duty:

1% on the 1st $180K

2% on the next $180K

3% on the remainder

12 Jan 2013

Max 35 years for loan tenure

LTV if > 30 yrs or the sum of tenure & age > 65 yrs, i.e. LTV

60% if no HL, 40% with 1 o/s HL

Refinancing tenure 35 yrs less no of years since 1st HL disbursed

LTV for companies from 50% to 40%

8 Dec 2011

29 Jun 2013

Total Debt Servicing Ratio (TDSR) threshold of 60% for Singapore & overseas properties, for residential /

non-residential properties, to individuals or entities set

up solely to purchase pty;

Haircut of 30% on variable income, rental & assets. All borrowers to be mortgagors, guarantors to be co-

borrowers;

For joint borrowings, the income-weighted average age of borrowers to be used to determine loan tenure.

28 Aug 2013

Banks max HDB tenure from 35 to 30 years

Banks HDB LTV reduced by 20% points if > 25 to 30 years or loan past age 65

Applications of MAS Notice 645 & MAS Notice 632

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Notice 632 Residential Property Loan

Notice 645 Total Debt Servicing Ratio

Properties in Singapore & overseas Residential, commercial, industrial

(including land, construction loan)

Individual, sole proprietor & entities set up specifically to purchase properties

Singapore residential properties Purchase (Home Loan): Individuals & all

non-individuals entities

Other credit facilities (Non-Home Loan): Individuals & vehicles set up solely to

purchase properties

TDSR up to 60% LTV, tenor, income-weighted average

age, borrower to be mortgagor,

prohibition of interest-only facility

Ap

plica

tio

n

Exc

lus

ion

Bridging Loan up to 6 months Credit facility secured by a pool of

collateral including property where the

market value of the subject property is

< 50% of the pool of collateral

Credit facility granted by a bank to a Property Developer to purchase

residential property for development

Bridging Loan Credit facility secured by a pool of

collateral (exclusion on LTV only)

Tenure

(Years)

Tenure + Age (extend past

retirement age 65)

Loan-

To-Value

No of HL (including

this application)

Cash

Down Payment

LTV, Tenure & Min Cash Down payment for property purchase

5% 10%

80% 60%

65

25 > 25

to 30

5% 10%

80% 60%

65

30 > 30 to 35

25% 25%

50% 30%

65

30 > 30

to 35

25% 25%

40% 20%

65

30 > 30

to 35

Only 1 HDB

Loan ^ 1st Private HL

3rd Home

Loan

> 65 > 65 > 65 > 65

Private Property OTP from 12 Jan 13 HDB OTP

from 28 Aug 13 Subject

Property

Note: LTV for companies is 20%

2nd Home Loan

4

^ If more than 1 HL, Banks HDB LTV reduced by 20% points if > 25 to 30 years or loan past age 65

Borrower, Mortgagor & Guarantor relationships

5

Date of OTP or

Application

B, M, G same as

original app?

Borrower to

be Mortgagor

Facility

Applied

Guarantor to

be borrower Yes

Yes

HL for

Purchase

Refinancing

HL only

Non-HL

Facility

Refinancing non-HL

(TL only or HL + TL)

Non-HL: Individuals only HL: Individuals & Companies Applicant

OTP from

29/6

Yes

Yes

OTP from

29/6

Yes

Yes

App from

29/6

Application date

from 29 June 2013

^ Where TDSR of borrowers meet 60% threshold but Bank requires guarantor for

added assurance, the true guarantor can be excluded as borrower.

Original TL/OD

Application Date

Yes No

No Yes Yes

No Yes Yes

Bf

29/6

From

29/6

Purchase of flat from HDB/DBSS/resale or re-financing HDB

loan

Loan Details Loan from HDB Banks HDB Loan

Maximum Tenure

for Purchase

25 years

30 years

Maximum Tenure

for Re-financing Not applicable

30 years less the no of years

since the 1st home loan granted

for the purchase of the flat was

disbursed

Maximum LTV

(no outstanding

Housing Loan)

90%

80% if loan tenure up to 25 years

& loan period does not extend

past age 65

60% if loan tenure > 25 to 30

years or loan period extends past

age 65

Mortgage Service

Ratio 30% 30%

6

The applicable HDB effective dates are on or after 28 Aug 13

Transaction Type Loan from HDB Banks HDB Loan

Purchase of flat from

HDB

Application for HDB Loan

Eligibility (HLE) letter received on

or after 27 August, 5.30 pm and

sales exercises launched from

July 2013

OTP granted on or after

28 Aug 2013, and sales

exercise launched from

July 2013

Purchase of resale flat

Application for HLE letter received

on or after

27 Aug 13, 5.30 pm

OTP granted on or after

28 August 2013

Re-financing of HDB

loan N/A

Application date on or after

28 August 2013

Taking over of

ownership of existing

flat

Application for HLE letter received

on or after

27 Aug 13, 5.30 pm

OTP granted on or after

28 August 2013

Purchase of flat under

the Design, Build & Sell

Scheme (DBSS)

Application for HLE letter received

on or after

27 Aug 13, 5.30 pm

OTP granted on or after

28 August 2013

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Income weighted average age (IWAA) is computed for joint

borrowings in order to determine tenure (w.e.f. 29 Jun 13)

8

Income of Younger Borrower >

Income of Older Borrower

Income of Younger Borrower <

Income of Older Borrower

Outcome IWAA is lower

Loan tenure is longer

IWAA is higher

Loan tenure is shorter

Income-

Weighted

Average Age

(IWAA)

A age 30 earns $7,000 pm

B age 50 earns $3,000 pm

IWAA = (30 x $7K) + (50 x $3K)

$7K + $3K

= 36 years

A age 30 earns $3,000 pm

B age 50 earns $7,000 pm

IWAA = (30 x $3K) + (50 x $7K)

$3K + $7K

= 44 years

Loan Tenure

for Private HL

Max Tenure = 35 yrs (60% LTV) Max age of 75 years less IWAA, capped

at 35 years. As 75 36 = 39 is higher than cap, max is 35 years

Tenure for 80% LTV = 29 yrs Tenure 30 years & < age 65 on maturity, i.e. tenure is 65 - 36 = 29 years

Max Tenure = 31 Years (60% LTV) Max age of 75 years less IWAA, capped

at 35 years. As 75 44 = 31 is lower than cap, max is 31 years

Tenure for 80% LTV = 21 years Tenure 30 years & < age 65 on maturity, i.e. tenure is 65 - 44 = 21 years

Instalment

(Single)

Existing

Instalment

(Joint)

Credit Card

(unsecured

revolving)

Secured

Revolving

Guarantor HDB or

EC fr Dev

Instalment

on subject

loan

3.5% for HL

Existing:

Statement

Apportion to

income

contribution

for existing

joint debts

(evidence of

joints income)

Min

Payment in

latest stmt

or interest

on full credit

limit

Monthly

interest on

amt

drawndown

or interest on

full credit limit

20% of

credit

facilities

(including

corporate)

Total Debt Servicing Ratio for PHL & HDB

70% average

last 12

months exc.

employer CPF

100% Fixed +

70% Variable

70% if borrower

is the landlord.

Submit stamped

tenancy

agreement with

min 6 months).

% deduction on

value divide 48

% Deduction Pledge 4yr for subject loan

Unpledged /

Pledge < 4 yr

SGD Deposit 0% 70%

Non Pty Asset 30% 70%

Fixed Variable Fixed +

Variable Rental

Assets

(unpledged)

100% monthly

income

exclude

employer CPF

9

Excluded MI of existing

property if buying HDB/EC

from developer

Existing resi pty to be sold No o/s facility on any pty except HL on 1st pty to be sold

No other pty singly or jointly

60%

HDB

Purchase

Mortgage Servicing Ratio for HDB (new/resale) & EC Purchased from Developer

Instalment

(Single)

Existing

Instalment

(Joint)

70% average

last 12

months exc.

employer CPF

100% Fixed +

70% Variable

70% if

borrower is

the landlord

Submit

stamped

tenancy

agreement with

min 6 months).

% deduction on

value divide 48

% Deduction Pledge 4yr for subject loan

Unpledged /

Pledge < 4 yr

SGD Deposit 0% 70%

Non Pty Asset 30% 70%

Fixed Variable Fixed +

Variable Rental

Assets (unpledged)

100% monthly

income

exclude

employer CPF

Apportion to income

contribution of

existing Property

Loan (evidence of

joint borrowers income)

Subject loan:

Interest at 3.5% for

residential loan

Existing Pty Loans:

Instalment in

statement

10

HDB Re-financing excluded

from MSR 30% cap

a. OTP prior to 12 Jan 13

b. Only property

c. Occupied by borrower

d. No facility on any pty except HL

on property being refinanced

EC Re-financing (purchased from

developer & still within minimum

occupation period)

a. OTP prior to 10 Dec 13 and

conditions b,c & d above

30%

Excluded MI of existing

property if buying HDB/EC

from developer

Existing resi pty to be sold No o/s facility on any pty except HL on 1st pty to be

sold

No other pty singly or jointly

Every $100K loan or $125K house price requires $750

monthly income (max 80% LTV for 30 years tenure)

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House Price Loan Amount Monthly Income

$ 125,000 $ 100,000 $ 750

$ 750,000 $ 600,000 $ 4,500

$ 1,000,000 $ 800,000 $ 6,000

$ 1,250,000 $ 1,000,000 $ 7,500

$ 1,500,000 $ 1,200,000 $ 9,000

Every

$100K loan

+$750 income

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$1000 debt requires additional $1,670 monthly income to

support the commitment. Every $100K deposits will reduce

monthly income required by $625.

House Price Loan Amount Monthly

Income

(30 Yrs)

Monthly

Income with

$1000 Debt

Monthly Income

with $1K Debt +

$100K Deposits*

$125,000 $100,000 $750 $2,420 $1,795

$750,000 $600,000 $4,500 $6,160 $5,535

$1,000,000 $800,000 $6,000 $7,660 $7,035

$1,250,000 $1,000,000 $7,500 $9,160 $8,535

$1,500,000 $1,200,000 $9,000 $10,650 $10,025

* Deposits placed with a Singapore Bank and must show evidence of funds prior to the first loan drawdown

(latest bank statement prior to solicitors advice to drawdown)

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Before After

Household Income (S$) 10,000 10,000

Max monthly repayment with 60% TDSR 6,000 6,000

1st Property Buyer, Max LTV 80%

Interest rate 2.80% 3.50%

Tenure (years) 30 30

Max loan amount on $6K monthly repayment 1,460,225 1,336,165

Max 1st property value 1,825,285 1,670,210 (-8%)

Illustration No 1: For a first time private property buyer with

average household income of $10K and no debts, the buyer

can afford property priced 8% lower than before the TDSR

rules.

Illustration No 2: For a 2nd time property buyer with an

existing home loan, the max property price he can afford is

8% less than prior to the new rules

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Before After

Household Income (S$) 10,000 10,000

Max monthly repayment with 60% TDSR 6,000 6,000

Existing Home Loan

Loan Amount 800,000 800,000

Interest Rate 1.30% 1.30%

Tenure (years) 30 30

Monthly Repayment 2,685 2,685

2nd Property Buyer, Max LTV 50%

Interest rate 2.80% 3.50%

Tenure (years) 30 30

Max loan amount with existing HL $800K HL 806,816 738,270

Max 2nd property value 1,613,631 1,476,539 (-8%)

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person.

Without prejudice to the generality of the foregoing, please seek advice from an independent financial and legal

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