MAS relaxes debt servicing rules for some home owners refinancing loans

The Monetary Authority of Singapore (MAS) has relaxed a major curb on home loans to allow more home owners and investors to refinance their existing mortgages. -- ST FILE PHOTO: KEVIN LIM
The Monetary Authority of Singapore (MAS) has relaxed a major curb on home loans to allow more home owners and investors to refinance their existing mortgages. -- ST FILE PHOTO: KEVIN LIM

The Monetary Authority of Singapore (MAS) has relaxed a major curb on home loans to allow more home owners and investors to refinance their existing mortgages.

The revised rules will only apply to home owners who are refinancing loans for homes that were bought before the TDSR came into effect on June 29 last year.

The MAS will exempt home owners from the Total Debt Servicing Ratio (TDSR) if they are refinancing their loan for the property they live in, even if they own other properties and are servicing other home loans, it said on Monday.

The TDSR prohibits borrowers from taking or refinancing home loans that bring their total monthly debt repayments to over 60 per cent of their gross monthly incomes.

Previously, owner-occupiers who wanted to refinance their loans could only be exempt from this rule if they owned no other property and had no other home loan.

The MAS will also allow a transition period for borrowers to refinance their loans for investment homes above the 60 per cent threshold, if they meet certain conditions.

They can do so until June 30, 2017, as long as they commit to a debt reduction plan with their bank at the point of refinancing, and if they fulfil the bank's credit assessment.

The revised rules are meant to "ease the debt servicing burden of these borrowers", the MAS said.