Why curbs apply to refinancing of home loans Source: Sunday Times | Think 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
Posted on: Mon, 19 Aug 2013 06:20:05 +0000
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