Will Singapore follow Hong Kong to cap maximum loan tenor?
Minister Khaw should !!
A recap of Hong Kong latest measures. The measures implemented by Hong Kong for mortgage applicants that have at least one existing mortgage are: a) debt-servicing ratio will be lowered to a maximum of 40% (previously 50%), and b) for mortgages assessed on applicant’s net worth, maximum loan-to-value (LTV) is lowered from 40% to 30% (applicants derive income from overseas, then LTV ratio is reduced by 20ppt). For all new mortgage applicants, the maximum loan term is now capped at 30 years.
The measures, if implemented, will have a bigger impact in Singapore than Hong Kong. The reduction in affordability would impact investment mass market demand negatively. However, the impact on the high-end segment is likely to be muted as buyers are generally cash-rich.
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