The Monetary Authority of Singapore (MAS) announced on Sept 1st that it will fine-tune the refinancing rules under the Total Debt Servicing Ratio (TDSR) framework with immediate effect to allow borrowers more flexibility in managing their debt obligations.
Existing property owners will now be exempted from a 60 percent cap (of salary) on their total debt servicing ratio. Since 2013, Singapore’s property prices have fallen by close to 10 percent following the implementation of property curbs.
MAS reiterated the importance for borrowers to exercise prudence and reduce their debt burdens, as the current low interest rate environment will not persist indefinitely. This new flexibility does not represent a relaxation of property cooling measures as the TDSR framework will still apply to new housing loans, the MAS said yesterday.
Singapore is facing economic headwinds due to a regional slowdown led by China, and the recent slump in oil prices. The nation cut the top end of its 2016 growth forecast after gross domestic product expanded an annualized 0.3 percent in the second quarter, less than previously estimated.
"We see the latest move having limited implications for USD-SGD or MAS policy. The move looks to avert a deeper correction in the home prices once the Fed starts to normalize its interest rate policy rate." said Commerzbank in a report.
