Feb 11, 2014

    MAS eases home loan rules to help refinancing owners

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

    The MAS will exempt home owners from the Total Debt Servicing Ratio (TDSR) framework 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 yesterday.

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

    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 income.

    Previously, owner-occupiers who wanted to refinance their loans could be exempt from this rule only if they did not own another property and had no other home loans.

    The MAS will also allow a transition period for borrowers to refinance their loans above the 60 per cent threshold for investment homes, 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 satisfy the bank's credit assessment.

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