MAS Broadens TDSR Exemption – Loan Curbs Relaxed

MAS is relaxing load curbs under the existing Total Debt Servicing Ratio (TDSR) framework.

This move comes after feedback from borrowers who face challenges refinancing loans for owner-occupied properties which were bought before the introduction of the TDSR rules.

Borrowers with more than one property loan are now exempt from meeting the TDSR threshold of 60% when refinancing the mortgage of the homes they live in.

This applies only to properties that were bought before 29 June last year.

While the TDSR threshold will still continue to apply to the refinancing of all investment properties, MAS has recognised that borrowers may face challenges in right-sizing their loans in the short-term.

Thus, borrowers are given until 30 June 2017 to refinance their remaining mortgages in line with the TDSR threshold.

Again, the properties must have been bought before 29 June last year to be eligible for the exemption.

Additionally, the Mortgage Servicing Ratio (MSR) will also not apply to the refinancing of loans for HDB flats and Executive Condominiums (ECs) that are owner-occupied and were purchased before 12 January 2013 and 10 December 2013 respectively.

These exemptions are expected to benefit homeowners who were caught by the TDSR requirements and may previously have had to sell their properties due to their inability to refinance, even at a loss.

This may help to prevent a sharp price correction in the property market as such selling is reduced.