New Cooling Measures

[taggy]

Thanks for sharing.
So your bank D has already been applying total DSR instead of MSR before, any idea of what interest rate they used to calculate DSR?

for the few loan application forms i filled, there were always fields to declare any other outstanding loans, including vehicle loans. But I am not sure whether the banks actually use those values for computation of loan approval.

[danguard]

You also say the bank never question you when you take loan...

MAS and the banks have VERY DIFFERENT objectives.

If you look at it from the point of the bank, if the LTV is 60%, do they care if you can finance the loan??? They don't care. If you cannot, they take back the property. If the property value fall by 20%, they ask for top up to safe guard themselves. To them it is pretty low risk. They don't care if the borrower defaults as long as they don't lose money.

MAS is different... they don't want too many borrowers to go and commit suicide as population will go down

MAS has cleverly built a backdoor for mortgage loan approvals even more than 60 percent so long as financial committee approves and there is a robust policy in place to monitor ... its not too hard to come up with one and written resolution approval ... I done a lot in my time as in-house for my company before also leh ....

[danguard]

Now like this, can I ask, who is going to sell????

The market will now move sideways for a long time for resale.... Hahahaha

So most sales will come from new development....

very sian .. i am aiming a resale one also as an upgrade emo to the max already

[danguard]

just checked. It is nearer to RGS which I will try tomm see if can walk along Shangri-La Hotel secret lane to Orchard bo. You see, I child that time very good at playing hide and seek in that place cause grandfather business is in that area lor.

eagerly awaiting your on-site report, and also tat of master DKSG one, feel on the ground especially after the MAS regulations is a good gauge of market sentiment

[Secretariat]

Just to share, HK banks used to do stress testing of the ability of applicants to repay loans assuming mortgage rate increase of 2%, earlier this year, HK Monetary Authority require them to assume mortgage rate increase of 3%.

So it is likely that Singapore banks have already been using interest rates of around 3.5% to stress test the ability to repay loans. However, more confirmations are needed from those who had insights of their previous practices.

I could confirm that, in 4qtr 2009, the newly announced MAS framework, in relation to TDSR, 70% of variable income, has/had been practiced by the local banks.

I requested the details, because at the time the markets were still volatile, and wanted to measure all the risks before investing in the landed, in term of what the bank would/could do when property prices continued to fall once vested.

In fact, I still have the handwritten worksheets, from the loan officers of DBS, UOB etc, as they explained the details.

The prevailing interest rates for the loan tenure required were used, not the forwarding rate as imposed by MAS today.

Maybe MAS announced the framework because the banks have been too liberal recently.

Cheers!

[Reisor]

Thanks for sharing.
So your bank D has already been applying total DSR instead of MSR before, any idea of what interest rate they used to calculate DSR?

Should be 2.5% thereabout, cannot really remember.

[yowetan]

How many return units for J-gateway so far?

[smartboy2]

How many return units for J-gateway so far?

YOWETAN. are you a reporter? Online troller?

[chiaseed]

Do the new rules affect repricing of loans?

[yowetan]

YOWETAN. are you a reporter? Online troller?

Hi...I am a gentleman whose vision is to own a Mt Sinai property.

[thomastansb]

The 60% DSR and 70% rental income have been in place since early 2000s when I started to buy property.

This is not even a CM at all. Just regulating those banks. Especially those smaller financial companies.

I could confirm that, in 4qtr 2009, the newly announced MAS framework, in relation to TDSR, 70% of variable income, has/had been practiced by the local banks.

I requested the details, because at the time the markets were still volatile, and wanted to measure all the risks before investing in the landed, in term of what the bank would/could do when property prices continued to fall once vested.

In fact, I still have the handwritten worksheets, from the loan officers of DBS, UOB etc, as they explained the details.

The prevailing interest rates for the loan tenure required were used, not the forwarding rate as imposed by MAS today.

Maybe MAS announced the framework because the banks have been too liberal recently.

Cheers!

[economist]

Thanks for all the sharings, so it appears that:
1. TDSR of 60% is nothing new.
2. 30% discount to variable income is nothing new.
3. Interest rate used for calculation could have been increased from prevailing interest rate or 2.5% to 3.5%.
4. Plugging of the loopholes of previous CMs, especially on using other people's name and age issue.

[economist]

MAS has cleverly built a backdoor for mortgage loan approvals even more than 60 percent so long as financial committee approves and there is a robust policy in place to monitor

-- is it stated somewhere in the announcement or the policy document?

[jslee78]

To know the real impact of this measure, one must know the existing bank policies and usual practices when they give out housing loans.
If banks have already been adhering to similarly strict policies or practices, say they use medium rate of 3% (slightly less than this time round's 3.5%) to calculate TDSR, then the impact would be minimal.
If banks have been too lax before, then there will be some impact.

We need forumers who just took loans in recent years and who have been able to understand how banks assess his TDSR and his eligibility, to contribute here, in order to gauge the impact. This is how a forum can really help.

Some bank can be very lax:To qualify for a housing loan end of last year and before the release of CM7.a deposit of 175K into a fixed deposit account for a "specify" short period will make everything very simple. Loan tenor can also be "discussed".What this mean is that those "smart" and well connected speculators can find ways to " slip" thro. via the grey area of the rules.

[minority]

Parents will find it difficult to buy properties for their children. So this rule will favour rich parents n their children can get a foot in property before any further rise in prices. End up HDB for Singaporeans n condos for rich people n foreigners. V hard to upgrade now.

Rich no need favour any climate they can buy . So I don't see any diff.

[dtrax]

Some bank can be very lax:To qualify for a housing loan end of last year and before the release of CM7.a deposit of 175K into a fixed deposit account for a "specify" short period will make everything very simple. Loan tenor can also be "discussed".What this mean is that those "smart" and well connected speculators can find ways to " slip" thro. via the grey area of the rules.

I think they also want to firmly regulate those banks where you still can loan without income based on AUM and there are still a couple of big banks that still does that even during the last few months. So this new ruling such practices can no longer be carried out anymore

[danguard]

-- is it stated somewhere in the announcement or the policy document?

Yeap it is stated in the mas announcement I read that specific approvals by finance committee of the loan in question can be done

[mosaic]

I think its perfectly fine to lend based on AUM provided the requirements are tight. If a person has 10 mil cash and outstanding 1 mil loan and he wants to buy another 2 mil property i don t see why there s no reason to grant him a a loan even if he s 60+ or 70

[limfc]

Maybe the bidding price for the next GLS will be telling what the developers really think about impact of this framework?

[LaFiestaOwner]

Did you guys see the bid by Capitaland at coronation? Outbid closest rival by $200psf at over $900psf. True? Must sell how much ah to make profit?

[Ringo33]

Since TDSR include into housing, cars and other personal loan

I am just wondering if it one can get around it by applying housing loan first, then follow by car loan, since this new regulation only applies to buying property and not car.

[danguard]

Since TDSR include into housing, cars and other personal loan

I am just wondering if it one can get around it by applying housing loan first, then follow by car loan, since this new regulation only applies to buying property and not car.

technically speaking mabbe can if u can plan your timing well i guess. Since upon loan approval, i doubt the practical aspect of banks really asking you to update TDSR if u do not default on your payments and all

[LaFiestaOwner]

Since TDSR include into housing, cars and other personal loan

I am just wondering if it one can get around it by applying housing loan first, then follow by car loan, since this new regulation only applies to buying property and not car.

Interesting.

[ysyap]

Since TDSR include into housing, cars and other personal loan

I am just wondering if it one can get around it by applying housing loan first, then follow by car loan, since this new regulation only applies to buying property and not car.

Of if you already have a car loan, then pay up the car loan first with maybe say $20k and qualify for a further $200k of housing loan since car loan may last max 10 years of high monthly commitment while housing loan can last 35 years of smaller monthly mortgage commitment?

Thanks Ringo33 for the useful tip...

[minority]

Since TDSR include into housing, cars and other personal loan

I am just wondering if it one can get around it by applying housing loan first, then follow by car loan, since this new regulation only applies to buying property and not car.

u can do that. wat will happen is ur might loose ur car 2-5K deposit lor. coz car loan might not approve. its not just property loan. its all loan no more than 60%. but for car maybe u can park under another person name. where as prop must be owner name.

[DKSG]

u can do that. wat will happen is ur might loose ur car 2-5K deposit lor. coz car loan might not approve. its not just property loan. its all loan no more than 60%. but for car maybe u can park under another person name. where as prop must be owner name.

If must count until like that, I will recommend the person, dont buy.

Technically instalments should not exceed xx% (cant disclose here coz in case got policy makers reading this post).

DKSG

[Adva181]

Parents will find it difficult to buy properties for their children. So this rule will favour rich parents n their children can get a foot in property before any further rise in prices. End up HDB for Singaporeans n condos for rich people n foreigners. V hard to upgrade now.

If all parents use their kids name to buy condo, nobody buy garmen BTO liao.

[Adva181]

Since TDSR include into housing, cars and other personal loan

I am just wondering if it one can get around it by applying housing loan first, then follow by car loan, since this new regulation only applies to buying property and not car.

If need to calculate until like dat, the cm is used to weed out fringe people like these.

[newbie11]

If all parents use their kids name to buy condo, nobody buy garmen BTO liao.

Aiyo how many parents can afford to buy for kids

[ysyap]

If all parents use their kids name to buy condo, nobody buy garmen BTO liao.

If kid's name is only borrower, then still ok last time. Can help pay for parents' property using cash and still own BTO.