Why curbs apply to refinancing of home loans

[reporter2]

http://www.straitstimes.com/archive/sunday/premium/think/story/why-curbs-apply-refinancing-home-loans-20130818

YOUR LETTERS

Why curbs apply to refinancing of home loans

Published on Aug 18, 2013


Mr Cheok Chin Yam asked why the total debt servicing ratio (TDSR) threshold of 60 per cent applies to the refinancing of housing loans ("Loan curbs may hurt home buyers"; last Sunday).

While there is no increase in the loan amount when a housing loan is refinanced, the Monetary Authority of Singapore has applied the 60 per cent TDSR threshold on refinancing of housing loans to encourage borrowers who have over-leveraged on past property purchases for investment purposes to right-size their loans at the point of refinancing.

This pre-emptive move decreases the possibility of such borrowers encountering difficulties in servicing their housing loans should interest rates rise, property prices fall, or economic conditions change.

A borrower looking to refinance his housing loan may be exempted from the 60 per cent threshold if he meets certain conditions. These are: The option to purchase the residential property was granted before June29; the borrower owns only one property that he occupies; and he does not have any other outstanding property-related loan.

Angelina Fernandez (Ms)

Director (Communications)

Monetary Authority of Singapore

[Miltonia]

Oh no..

Owners who need to refinance due to cash flow problems might find that they could no longer do so. Similarily if they want to take advantage of lower interest rates etc (Not likely to be the case). It seems that refinancing is going to be harder though not impossible. Add more borrowers?

[mermaid]

Oh no..

Owners who need to refinance due to cash flow problems might find that they could no longer do so. Similarily if they want to take advantage of lower interest rates etc (Not likely to be the case). It seems that refinancing is going to be harder though not impossible. Add more borrowers?

can add more borrowers without the corresponding ownership meh?

[newbie11]

can.. and new co-borrower will be affected by LTV and TDSR next time.

[amk]

Oh no..

Owners who need to refinance due to cash flow problems might find that they could no longer do so. Similarily if they want to take advantage of lower interest rates etc (Not likely to be the case).
u know, this is MAS "punishing" these buyers, instead of "protecting" these buyers.

"I told you so many times to be prudent, but you never listened and go and buy, so I put this TDSR thing so you will suffer !"

for a long time, a mortgage package consist of First 3 years + the Rest, and banks assume ppl will refinance after 3 yrs, so much so I remember one famous banker even saying "rate after 3y is academic".

Now banks get an accidental windfall from this. I can imagine most will have a healthy spread after the 3y login.

[chestnut]

u know, this is MAS "punishing" these buyers, instead of "protecting" these buyers.

"I told you so many times to be prudent, but you never listened and go and buy, so I put this TDSR thing so you will suffer !"

for a long time, a mortgage package consist of First 3 years + the Rest, and banks assume ppl will refinance after 3 yrs, so much so I remember one famous banker even saying "rate after 3y is academic".

Now banks get an accidental windfall from this. I can imagine most will have a healthy spread after the 3y login.

The bank with the biggest marketshare on loans will be laughing (to the bank) all the way.... hahahahahaha

[mermaid]

some borrowers even go to the extent of choosing a bank becos it has a slight lower rate during the 1st 1-3 yrs.
Their justification being, "I can always refinance after the 3rd yr/lock in period" :doh:

[star]

Hi mermaid, you ask where to buy few days ago? Buy RV residences cheap and good. Can move in or rent out next year.

[heehee]

Good choice, better than Jurong


Hi mermaid, you ask where to buy few days ago? Buy RV residences cheap and good. Can move in or rent out next year.

[mermaid]

Hi mermaid, you ask where to buy few days ago? Buy RV residences cheap and good. Can move in or rent out next year.

Im only interested in BUC lah ...
but Im not interested in tat whole plot of CDL land in pasir ris.

[henryhk]

u know, this is MAS "punishing" these buyers, instead of "protecting" these buyers.

"I told you so many times to be prudent, but you never listened and go and buy, so I put this TDSR thing so you will suffer !"

for a long time, a mortgage package consist of First 3 years + the Rest, and banks assume ppl will refinance after 3 yrs, so much so I remember one famous banker even saying "rate after 3y is academic".

Now banks get an accidental windfall from this. I can imagine most will have a healthy spread after the 3y login.
Think positively, any buyers now are damn solid finance, so tose who have committed to 2 to 3 properties can sit back and let the market slowly stabilize before moving up.....the recent PM announcement is positive, hdb rental is ok, the low income group housing needs are satisfied, our health care is taken care of.....I got no more worries but to collect as much rent as possible now and get ready for the next buy...don't underestimate the rental yield for your properties, is like regular savings