MAS Notice 632 Residential Property Loan & MAS Notice 645 Total Debt Servicing Ratio

With effect from 10 December 2013, Tuesday For external presentation

Updated on 9 December 2013

Summary of Property Cooling Measures

14 Sep 2009
Interest absorption scheme (IAS) removed Government Land Sale programme reinstated

14 Jan 2011
SSD holding period to 4 yrs & rates chargeable changed to 16%, 12%, 8% & 4% LTV 60% for individual borrowers with at least 1 o/s HL LTV 50% for companies

12 Jan 2013
ABSD: PRs 1st property (5%) & Singaporeans 2nd property (7%). PRs 2nd property & Singaporeans 3rd property at 10%. Foreigners & companies 15%. LTV: 50% with 1 o/s HL (30% if tenure > 30 years or loan past age 65). 40% with 2 o/s HL (20% if tenure > 30 years or loan past age 65). Corporates LTV from 40% to 20%. Min Cash Down Payment: No o/s HL: No change, i.e. 5% and 10% if tenure > 30 years or loan extends past age 65. 1 o/s HL: 25% ( from 10%). Mortgage Service Ratio for HDB loan for purchase & refinancing: 30% of borrowers gross monthly income.

20 Feb 2010
Max loan-to-value (LTV) limit from 90% to 80% Sellers stamp duty (SSD) levied on sale of private residential property within 1 year of purchase

8 Dec 2011
Additional Buyers Stamp Duty + 10% for foreigners & companies + 3% for PRs 2nd property + 3% for Singaporeans 3rd property above existing Buyers Stamp Duty: 1% on the 1st $180K 2% on the next $180K 3% on the remainder

30 Aug 2010
SSD holding period increased to 3 yrs (full SSD if sold within 1st
year, 2/3 SSD if sold within 2nd year & 1/3 SSD if sold within 3rd year)

29 Jun 2013
Total Debt Servicing Ratio (TDSR) threshold of 60% for Singapore & overseas properties, for residential / non-residential properties, to individuals or entities set up solely to purchase pty; Haircut of 30% on variable income, rental & assets. All borrowers to be mortgagors, guarantors to be coborrowers; For joint borrowings, the income-weighted average age of borrowers to be used to determine loan tenure.

6 Oct 2012
Max 35 years for loan tenure LTV if > 30 yrs or the sum of tenure & age > 65 yrs, i.e. LTV 60% if no HL, 40% with 1 o/s HL Refinancing tenure 35 yrs less no of years since 1st HL disbursed LTV for companies from 50% to 40%

For buyers with o/s HL, min cash down -payment increased from 5% to 10% of valuation limit & LTV from 80% to 70% Min. occupation period of nonsubsidised HDB flats from 3 to 5 years (resale & subletting restriction)

28 Aug 2013
Banks max HDB tenure from 35 to 30 years Banks HDB LTV reduced by 20% points if > 25 to 30 years or loan past age 65 2

Applications of MAS Notice 645 & MAS Notice 632

Notice 645
Total Debt Servicing Ratio

Notice 632
Residential Property Loan
LTV, tenor, income-weighted average age, borrower to be mortgagor, prohibition of interest-only facility
Singapore residential properties Purchase (Home Loan): Individuals & all non-individuals entities Other credit facilities (Non-Home Loan): Individuals & vehicles set up solely to purchase properties Credit facility granted by a bank to a Property Developer to purchase residential property for development Bridging Loan Credit facility secured by a pool of collateral (exclusion on LTV only)
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TDSR up to 60% Application Properties in Singapore & overseas Residential, commercial, industrial (including land, construction loan) Individual, sole proprietor & entities set up specifically to purchase properties

Exclusion

Bridging Loan up to 6 months Credit facility secured by a pool of collateral including property where the market value of the subject property is < 50% of the pool of collateral

LTV, Tenure & Min Cash Down payment for property purchase
Subject Property No of HL
(including this application)

HDB OTP from 28 Aug 13 Only 1 HDB Loan ^ > 25 to 30 1st

Private Property OTP from 12 Jan 13 3rd Home Loan > 30 to 35

Private HL

2nd

Home Loan

Tenure (Years)
Tenure + Age
(extend past retirement age 65)

25

30

> 30 to 35

30

> 30 to 35

30

65

> 65

65

> 65

65

> 65

65

> 65

LoanTo-Value Cash Down Payment

80%

60%

80%

60%

50%

30%

40%

20%

5%

10%

5%

10%

25%

25%

25%

25%

^ If more than 1 HL, Banks HDB LTV reduced by 20% points if > 25 to 30 years or loan past age 65 Note: LTV for companies is 20%

Borrower, Mortgagor & Guarantor relationships

Applicant Facility Applied Date of OTP or Application B, M, G same as original app? Original TL/OD Application Date

HL: Individuals & Companies HL for Purchase OTP from 29/6 Refinancing HL only OTP from 29/6

Non-HL: Individuals only Non-HL Facility App from 29/6

Refinancing non-HL (TL only or HL + TL)

Application date from 29 June 2013

Yes Bf 29/6 Yes Yes Yes No From 29/6 Yes

No

Borrower to be Mortgagor
Guarantor to be borrower

Yes

Yes

Yes

Yes

No

Yes

Yes

^ Where TDSR of borrowers meet 60% threshold but Bank requires guarantor for added assurance, the true guarantor can be excluded as borrower.

Purchase of flat from HDB/DBSS/resale or re-financing HDB loan

Loan Details Loan from HDB Banks HDB Loan 30 years 30 years less the no of years since the 1st home loan granted for the purchase of the flat was disbursed 80% if loan tenure up to 25 years & loan period does not extend past age 65

Maximum Tenure for Purchase

Maximum Tenure for Re-financing

25 years

Not applicable

Maximum LTV (no outstanding Housing Loan)

90%
60% if loan tenure > 25 to 30 years or loan period extends past age 65 30% 30%

Mortgage Service Ratio

The applicable HDB effective dates are on or after 28 Aug 13

Transaction Type Loan from HDB Banks HDB Loan OTP granted on or after 28 Aug 2013, and sales exercise launched from July 2013 OTP granted on or after 28 August 2013 Application date on or after 28 August 2013 OTP granted on or after 28 August 2013

Purchase of flat from HDB

Application for HDB Loan Eligibility (HLE) letter received on or after 27 August, 5.30 pm and sales exercises launched from July 2013 Application for HLE letter received on or after 27 Aug 13, 5.30 pm
N/A Application for HLE letter received on or after 27 Aug 13, 5.30 pm Application for HLE letter received on or after 27 Aug 13, 5.30 pm

Purchase of resale flat Re-financing of HDB loan Taking over of ownership of existing flat Purchase of flat under the Design, Build & Sell Scheme (DBSS)

OTP granted on or after 28 August 2013

Income weighted average age (IWAA) is computed for joint borrowings in order to determine tenure (w.e.f. 29 Jun 13)
Income of Younger Borrower > Income of Older Borrower Outcome IncomeWeighted Average Age (IWAA) IWAA is lower Loan tenure is longer A age 30 earns $7,000 pm B age 50 earns $3,000 pm IWAA = (30 x $7K) + (50 x $3K) $7K + $3K = 36 years Income of Younger Borrower < Income of Older Borrower IWAA is higher Loan tenure is shorter A age 30 earns $3,000 pm B age 50 earns $7,000 pm IWAA = (30 x $3K) + (50 x $7K) $3K + $7K = 44 years

Loan Tenure for Private HL

Max Tenure = 35 yrs (60% LTV)

Max age of 75 years less IWAA, capped at 35 years. As 75 36 = 39 is higher than cap, max is 35 years

Max Tenure = 31 Years (60% LTV)

Max age of 75 years less IWAA, capped at 35 years. As 75 44 = 31 is lower than cap, max is 31 years

Tenure for 80% LTV = 29 yrs

Tenure 30 years & < age 65 on maturity, i.e. tenure is 65 - 36 = 29 years

Tenure for 80% LTV = 21 years

Tenure 30 years & < age 65 on maturity, i.e. tenure is 65 - 44 = 21 years

Instalment on subject loan 3.5% for HL Existing: Statement Instalment (Single)

Apportion to income contribution for existing joint debts (evidence of joints income) Existing Instalment (Joint)

Min Payment in latest stmt or interest on full credit limit

Monthly interest on amt drawndown or interest on full credit limit

20% of credit facilities (including corporate)

Excluded MI of existing property if buying HDB/EC from developer Existing resi pty to be sold No o/s facility on any pty except HL on 1st pty to be sold No other pty singly or jointly HDB or EC fr Dev

Credit Card (unsecured revolving)

Secured Revolving

Guarantor

Total Debt Servicing Ratio for PHL & HDB Fixed + Variable 100% Fixed + 70% Variable Assets (unpledged)

60%
% deduction on value divide 48
% Deduction SGD Deposit Non Pty Asset Pledge 4yr for subject loan 0% 30% Unpledged / Pledge < 4 yr 70% 70%

Fixed 100% monthly income exclude employer CPF

Variable 70% average last 12 months exc. employer CPF

Rental 70% if borrower is the landlord. Submit stamped tenancy agreement with min 6 months).

Subject loan: Interest at 3.5% for residential loan Existing Pty Loans: Instalment in statement

Apportion to income contribution of existing Property Loan (evidence of joint borrowers income)

Excluded MI of existing property if buying HDB/EC from developer Existing resi pty to be sold No o/s facility on any pty except HL on 1st pty to be sold No other pty singly or jointly

HDB Re-financing excluded from MSR 30% cap a. OTP prior to 12 Jan 13 b. Only property c. Occupied by borrower d. No facility on any pty except HL on property being refinanced EC Re-financing (purchased from developer & still within minimum occupation period) a. OTP prior to 10 Dec 13 and conditions b,c & d above

Instalment (Single)

Existing Instalment (Joint)

HDB Purchase

Mortgage Servicing Ratio for HDB (new/resale) & EC Purchased from Developer Fixed + Variable 100% Fixed + 70% Variable

30%
Unpledged / Pledge < 4 yr 70% 70% 10

Fixed 100% monthly income exclude employer CPF

Variable 70% average last 12 months exc. employer CPF

Rental 70% if borrower is the landlord Submit stamped tenancy agreement with min 6 months).

Assets
(unpledged)

% deduction on value divide 48

% Deduction SGD Deposit Non Pty Asset Pledge 4yr for subject loan 0% 30%

Every $100K loan or $125K house price requires $750 monthly income (max 80% LTV for 30 years tenure)
House Price $ $ $ $ $ 125,000 750,000 1,000,000 1,250,000 1,500,000 Loan Amount $ $ $ 100,000 600,000 800,000 Monthly Income $
Every $ $100K loan +$750 income

750 4,500 6,000 7,500 9,000

$ $ $

$ 1,000,000 $ 1,200,000

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$1000 debt requires additional $1,670 monthly income to support the commitment. Every $100K deposits will reduce monthly income required by $625.
House Price $125,000 $750,000 $1,000,000 $1,250,000 $1,500,000 Loan Amount $100,000 $600,000 $800,000 $1,000,000 $1,200,000 Monthly Income (30 Yrs) $750 $4,500 $6,000 $7,500 $9,000 Monthly Income with $1000 Debt $2,420 $6,160 $7,660 $9,160 $10,650
Monthly Income with $1K Debt + $100K Deposits*

$1,795 $5,535 $7,035 $8,535 $10,025

* Deposits placed with a Singapore Bank and must show evidence of funds prior to the first loan drawdown (latest bank statement prior to solicitors advice to drawdown)

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Illustration No 1: For a first time private property buyer with average household income of $10K and no debts, the buyer can afford property priced 8% lower than before the TDSR rules.
Before Household Income (S$) 10,000 After 10,000

Max monthly repayment with 60% TDSR 1st Property Buyer, Max LTV 80%
Interest rate Tenure (years) Max loan amount on $6K monthly repayment Max 1st property value

6,000

6,000

2.80% 30 1,460,225 1,825,285

3.50% 30 1,336,165 1,670,210 (-8%)

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Illustration No 2: For a 2nd time property buyer with an existing home loan, the max property price he can afford is 8% less than prior to the new rules
Household Income (S$) Max monthly repayment with 60% TDSR Existing Home Loan Loan Amount Interest Rate Tenure (years) Monthly Repayment Before 10,000 6,000 After 10,000 6,000

800,000 1.30% 30 2,685 2.80% 30 806,816 1,613,631

800,000 1.30% 30 2,685 3.50% 30 738,270 1,476,539 (-8%)

2nd Property Buyer, Max LTV 50% Interest rate Tenure (years) Max loan amount with existing HL $800K HL Max 2nd property value

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Disclaimer
The information provided herein is intended for general information and discussion purposes only. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person.

Without prejudice to the generality of the foregoing, please seek advice from an independent financial and legal adviser regarding the information provided herein taking into account your specific objectives, financial situation or particular needs before you make a commitment to purchase any property and/or borrow from any entity or institution to finance the purchase of the property. This does not constitute an offer or solicitation to provide loan or financing to any particular person or to enter into a transaction.
No representation or warranty whatsoever (including without limitation any representation or warranty as to accuracy, usefulness, adequacy, timeliness or completeness) in respect of any information (including without limitation any statement, figures, opinion, view or estimate) provided herein is given by OCBC Bank and it should not be relied upon as such. OCBC Bank does not undertake an obligation to update the information or to correct any inaccuracy that may become apparent at a later time. All information presented is subject to change without notice. OCBC Bank shall not be responsible or liable for any loss or damage whatsoever arising directly or indirectly howsoever in connection with or as a result of any person acting on any information provided herein. The information provided herein may contain projections or other forward looking statement regarding future events or future performance of countries, assets or markets. Actual events or results may differ materially. Past performance figures are not necessarily indicative of future or likely performance. Any reference to any specific entity, authority, area, figures, property or asset class in whatever way is used for illustrative purposes only and does not constitute a recommendation on the same. This presentation and its contents are considered proprietary information and may not be reproduced or disseminated in whole or in part without OCBC Banks written consent.

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