Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam on Sunday said that the latest home loan rules are not another round of property cooling measures, and that the market is showing signs of stabilising.
Mr Tharman said the new Total Debt Servicing Ratio Framework is a long-term rule to get banks to start practising prudence when it comes to total debt.
Under the new framework, banks will not approve a loan if the monthly repayments of a property buyer’s total debt obligations exceed 60 per cent of his or her income.
He also explained the rationale behind the tighter Loan-to-Value (LTV) limits on housing loans.
He said: “The second part of the rules was to plug some loopholes in the rules for the Loan-To-Value ratio that were already announced earlier. The tighter Loan-To-Value ratio for second properties especially. We want to make sure that it’s not so easy to get around the rules. That was the purpose of the second set of measures, but it wasn’t a new round of cooling measures. ”
Source : Channel NewsAsia – 7 July 2013