- Central bank relaxed homeowners’ refinancing rules last week
- Home values have dropped 9.4 percent from the peak in 2013
Singapore doesn’t intend to ease property curbs that have dragged home prices down by almost one-tenth anytime soon, the head of the central bank said.
The relaxing of mortgage refinancing rules announced last week by the Monetary Authority of Singapore are aimed at easing homeowners’ debt burdens rather than create demand for new housing loans, the central bank’s Managing Director Ravi Menon said Tuesday.
“This doesn’t represent an easing at all,” Menon said. “If you look for a prop up to the market, this is not going to help as it doesn’t apply to new loans. This is to improve financial prudence without creating new demand for housing loans. We won’t ease anytime soon.”
Households who are refinancing their existing mortgages will be exempted from a 60 percent cap on their total debt-servicing ratio, even if they had observed it when making the purchase, the MAS said last week. The exemption, which took effect immediately, only applies to owner-occupiers, the MAS said. The so-called Total Debt Servicing Ratio framework was introduced in 2013.
Singapore’s home prices and sales have eased since the government began introducing housing curbs in 2009, with some of the strictest measures implemented in 2013, including the TDSR framework and higher stamp duties on residential purchases. The government has repeatedly signaled it’s not ready to ease the curbs yet, even as economic growth slows and unemployment rises. Home values have dropped 9.4 percent from the peak in 2013.