On December 15, the Singapore government announced new measures to cool the private residential and HDB resale markets. At a glance these measures include:
- Tightening of the Loan-To-Value (LTV) limits for HDB housing loan
- Raise in the Additional Buyer's Stamp Duty (ABSD) rates for those buying second and subsequent properties
- Tightening of Total Debt Servicing Ratio (TDSR) threshold
As private housing prices and HDB resale flat values have increased by about 9% and 15% respectively since the first quarter of 2020, the introduction of these new measures are meant to "promote continued housing affordability".
Tightening of the Loan-To-Value (LTV) limits for HDB housing loan
From December 16 onwards, the LTV limits for HDB housing loans will reduce from 90% to 85%. Before, home buyers were typically able to get a maximum loan of 90% of the property purchase price through HDB and then pay the remaining 10% as down payment through cash or CPF. With the new measure, home buyers will now need to fork out an extra 5% down payment through cash or CPF payment and thereby have a lesser loan quantum.
This however does not apply to bank loans, where the LTV limit will stay at 75%.
Raise in the Additional Buyer's Stamp Duty (ABSD) rates for those buying second and subsequent properties
|Additional Buyer's Stamp Duty (ABSD) rates||Current rates||Rates as of 16 Dec 2021|
|Singapore citizens||First residential property||0%||0%|
|Second residential property||12%||17%|
|Third and subsequent residential property||15%||25%|
|Permanent residents||First residential property||5%||5%|
|Second residential property||15%||25%|
|Third and subsequent residential property||15%||30%|
Currently, the ABSD rates for Singapore citizens and Permanent Residents (PRs) purchasing their first residential property will not change. What has changed is the stamp duty rates when purchasing a second and subsequent property. Singapore citizens buying a second property will see a rise of 5% in ABSD rates from 12% to 17%, and a rise of 10% from 15% to 25% for a third and subsequent property.
For the rise in rates, please refer to the table above.
Tightening of Total Debt Servicing Ratio (TDSR) threshold
TDSR limits the amount a person can spend on monthly debt repayments. Before it was set to 60%, which means mortgages cannot cause the borrower’s total monthly loan repayment to exceed 60% of their monthly income. This however will be reduced to make smaller home loans for borrowers. According to new measures, TDSR will be lowered from 60% to 55% as of 16 December. Borrowers of property loans granted beforehand will not be affected.