Tag Archives: Monetary Authority of Singapore

Cooling measures have been effective

Posted on 27 May 2014 | Comments Off on Cooling measures have been effective

The curbs imposed by the government from 2009 to 2013 have not only controlled the property bubble, they were also an important complement to monetary policy, said the Monetary Authority of Singapore (MAS) Managing Director Ravi Menon in media reports.

However, as they were introduced during a “highly unusual situation”, they will not be a permanent feature of policy and will only be implemented from time to time.

The eight rounds of property cooling measures include limiting the maximum loan tenure at 35 years, pegging the total debt servicing ratio (TDSR) at 60 percent, and capping the property-related exposure of banks at 35 percent of their overall lending.

For mortgages with tenures of less than 30 years, the loan-to-value (LTV) ratios were fixed at 80 percent for the first loan, 50 percent for the second and 40 percent for the third. For mortgages payable over 30 years, the LTV ratios were reduced to 60 percent, 30 percent and 20 percent respectively.

Interestingly, Singapore was one of the pioneers of such initiatives, introducing them as early 1996. Asian countries with similar existing measures are China, Korea, Malaysia and Hong Kong.

The city-state also introduced fiscal measures, such as buyer stamp duties of three to 18 percent and seller stamp duties of four to 16 percent, because the aforementioned macroprudential measures may not be enough to control loan growth and asset price increases.

“These are essentially transaction taxes that aim to curb the speculative flipping of properties,” added Menon.

Source : PropertyGuru

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Posted in Cooling Measures, Government, Loan / Mortgage / Finance, Property Market / Real Estate, Tax Matters / Property Tax

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TDSR curbs should not constrain genuine, long-term local investors

Posted on 17 Feb 2014 | Comments Off on TDSR curbs should not constrain genuine, long-term local investors

I refer to the report “MAS relaxes TDSR loan curbs for some homeowners” (Feb 11), and welcome the tweak to the loan policy.

The Total Debt Servicing Ratio was introduced last June to encourage financial prudence and discourage people from speculative investment in property.

It has hit home sales and launches in the suburbs and, at this point, any further cooling measures would hurt the genuine, mid- to long-term investors.

There is a limit to how much a developer will lower prices to attract buyers, other than to entice the latter to much smaller, more affordable units.

More investors are looking at neighbouring countries and Australia for more flexible loan criteria, but with similar stringent screening of borrowers’ ability to repay the loan.

From an economic standpoint, one may ask whether Singapore benefits if our people invest their monies overseas. Recent reports about investing in Iskandar Malaysia suggest that more young people want to earn money in Singapore, but spend a luxurious lifestyle where cost of living is lower.

The TDSR hits Singaporean buyers harder than it does foreigners, leading to more co-ownership of private property among family members, who need a bigger loan due to the cash outlay for the Additional Buyer’s Stamp Duty.

It has probably a lower impact on first-time homebuyers than on property investors, more of whom are also turning to commercial/industrial properties for more growth in rental income.

I look forward to a TDSR framework that does not constrain genuine, long-term local investors and diminish their capacity to play critical economic roles here in the coming years. After all, property is a safer investment here than, say, stocks.

from James Poh Ching Ping

Source : Today 17 Feb 2014

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Posted in Government, Loan / Mortgage / Finance

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