Private Homeowners Face Longer Wait to Buy HDB Resale Flats
The Singapore Government introduced a series of new property cooling measures on September 29, aimed at moderating demand in both the private property and HDB resale markets while promoting responsible borrowing amid rising interest rates. These measures, effective from September 30, include tightened loan quantum limits and a 15-month wait-out period for private home owners purchasing HDB resale flats.
One key change is the reduction in the loan-to-value (LTV) limit for HDB loans, which drops from 85% to 80%. This limits the maximum loan amount borrowers can take from HDB. However, the revised LTV limit does not affect loans from financial institutions, which remain capped at 75%.
Additionally, private home owners looking to purchase an HDB resale flat will now have to wait 15 months after selling their private property before doing so. Previously, they were allowed to buy a resale flat within six months of selling their private property. The new measure is intended to curb demand and manage the upward pressure on HDB resale prices, which have increased by more than 5% as of Q2 2022.
Minister for National Development, Desmond Lee, pointed out that mortgage interest rates have risen sharply since 2021, with many loans now pegged to floating rates. This, in turn, increases the borrowing costs for both new home buyers and those servicing existing loans. As a result, the Government is adjusting loan limits and introducing a medium-term interest rate floor for property loans, designed to ensure borrowers can manage their repayments without facing financial strain.
For private property loans, the medium-term interest rate floor, used in calculating the total debt servicing ratio (TDSR) and the mortgage servicing ratio (MSR), has been raised by 0.5 percentage points. This will apply to loans with an option to purchase granted on or after September 30. For HDB loans, an interest rate floor of 3% will apply to fresh applications for loan eligibility letters received after this date.
While the 15-month wait-out period applies to private home owners, seniors aged 55 and above moving to a four-room or smaller resale flat are exempt. First-time private home owners seeking to apply for CPF Housing Grants will also continue to face a 30-month wait-out period. These adjustments are part of ongoing efforts to keep public housing affordable, accessible, and inclusive for Singaporeans, particularly first-time buyers.
The Government remains committed to monitoring the property market and adjusting policies as needed to maintain balance and affordability. They urge potential home buyers to carefully consider their ability to service long-term loans before making any commitments.
