1 in 3 home buyers 'unaware of how TDSR rules work'

[reporter2]

http://www.straitstimes.com/archive/...-work-20140510

1 in 3 home buyers 'unaware of how TDSR rules work'

Published on May 10, 2014 1:06 AM

By Audrey Kang


ONE in three home buyers does not understand the new total debt servicing ratio (TDSR) framework for property loans, a survey by United Overseas Bank has found.

The survey, conducted from March 20 to 27, quizzed 210 Singapore citizens and permanent residents on their awareness of the framework. Both private property and Housing Board home buyers took part.

Introduced by the Monetary Authority of Singapore in June last year, the TDSR framework restricts banks from approving home loans if a person's monthly debt obligations exceed 60 per cent of his monthly gross income.

Besides being unaware of how the TDSR framework operates, 42 per cent of the respondents did not know how existing cooling measures affect their loan applications, the survey found.

In addition, 43 per cent were unaware of how the TDSR framework applies to their personal situation.

While 64 per cent said they were aware of how debt is calculated under the TDSR framework, many failed to understand that banks have to look at their total debt obligations, including repayments for unsecured loans and obligations as a guarantor.

This means home buyers often fail to produce credit card statements from all card issuers, information on vehicle loans and documents showing they are a guarantor for other loans.

Ms Chia Siew Cheng, UOB's head of secured loans, said in a statement: "The TDSR framework requires a more holistic view of the home buyer's total debt obligation for property loans.

"Most of the time, home buyers bring inadequate or incorrect documents to support their applications or are not aware that loans are granted based on an assessment of their total outstanding debt, including credit cards."

It also found that 42 per cent of first-time home buyers prefer to do their own research online, while 60 per cent of experienced home buyers choose to speak to mortgage specialists to understand more about the application process and best loan options.

[email protected]

[reporter2]

http://www.businesstimes.com.sg/arch...urvey-20140510

Published May 10, 2014

1 in 3 home buyers still not familiar with TDSR: UOB survey

By Lynette Khoo

[email protected] @LynetteKhooBT


ONE in three home buyers are unaware of or do not understand the new total debt servicing ratio (TDSR) framework, a recent survey has revealed.

The survey by UOB found that home buyers' top two uncertainties over the new TDSR framework are how the existing cooling measures affect their loan application and how the framework applies to their personal situations.

The TDSR was introduced last June by the Monetary Authority of Singapore (MAS) to ensure that all debt obligations of borrowers do not exceed 60 per cent of their gross monthly income, in a bid to encourage prudent borrowing by households and to strengthen credit underwriting standards by financial institutions.

"Ten months on, our survey shows there is still a significant group of potential home buyers who are not familiar with the rules," said Chia Siew Cheng, head of secured loans at UOB Group.

"Most of the time, home buyers bring inadequate or incorrect documents to support their application or are not aware that loans are granted based on an assessment of their total outstanding debt including credit cards," she said.

Some 210 people were surveyed by UOB between March 20 and 27. They include Singaporeans and permanent residents aged 21 to 65 years who have bought a property in the past nine months or are looking to purchase a property within the next two years.

About 30 per cent were looking to buy a private condo.

There also seems to be a gap between what borrowers think they know and what they truly know.

While some 64 per cent of the respondents claimed that they are aware of how debt is calculated in the new framework, UOB observed that potential borrowers often do not bring along all the relevant documents such as their credit card statements, vehicle loans and guarantor notes.

To deal with the situation, UOB said that it came up with a home loan application checklist for its customers.

To simplify the home loan application process, UOB is also working with several industry bodies to access more comprehensive credit bureau information.

The survey also showed that first-time home buyers tend to do their own research online while experienced home buyers prefer to engage a mortgage specialist to find out more about the application process and suitable loan options.