Government imposes new curbs on property buys through debt servicing framework

THE Government has imposed fresh curbs to cool the property market with the introduction of a new debt servicing framework.

From June 29, banks must take into account a borrower's outstanding debts, including non-property ones such as a car loan, when granting him a property loan.

His total monthly repayments of his debt obligations should not exceed 60 per cent of his gross monthly income.

The Monetary Authority of Singapore will also refine rules related to the application of the existing loan-to-value (LTV) limits on housing loans.

They are to ensure the effectiveness of the limits to cool investment demand in the housing market.

"In particular, they aim to prevent circumvention of the tighter LTV limits on second and subsequent housing loans," MAS noted.

The debt servicing ratio will "apply to loans for the purchase of all types of property, loans secured on property, and the refinancing of all such loans".