Property cooling measures Sep 2022
The latest set of cooling measures from 30 September 2022 aims to moderate demand and ensure that resale flats remain affordable for buyers.
Private property owners will now have to wait for 15 months after selling their property before they can buy a non-subsidised HDB resale flat.
the government introduced a 15-month wait-out period for private property owners and ex-private property owners looking to buy non-subsidised HDB resale flats. Seniors aged 55 and above moving to a 4-room or smaller resale flat will be exempted.
According to the official release, this is specifically to "moderate demand in the HDB resale market". It is also a temporary measure that will be reviewed.
The loan-to-value limit for HDB loans will be lowered from 85% to 80% to encourage more financial prudence when taking on loans.
In the December 2021 cooling measures, the government lowered the HDB LTV limit from 90% to 85%. This time, they further slashed it to 80%. This means that in less than a year, the minimum downpayment for HDB loans has doubled from 10% (before 16 December 2021) to 20% (30 September 2022 onwards).
This will apply for all new flat applications (HDB BTO, Sale of Balance Flat (SBF), and open booking exercises), and all complete HDB resale flat applications received on or after 30 September 2022.
Tightening of Maximum Loan Quantum Limits Through Interest Rate Floors.
For home loans from banks and financial institutions granted on or after 30 September 2022, the medium-term interest rate floor used to compute the TDSR and MSR will be increased by 0.5%. It will go up from 3.5% to 4%. If there is no Option-to-Purchase (OTP), the date of the Sale and Purchase Agreement will be used. The actual interest rate will still be determined by the lender, this impacts only the computation of TDSR and MSR, and hence, the final borrowing amount.
The impact of this 0.5% increase in floor rate translates to an approximate 5% drop in the budget available for one’s purchase.
For HDB-granted loans, the government introduced a new interest rate floor of 3%. Likewise, this will apply to all new applications for the HDB Loan Eligibility (HLE) letter received on or after 30 September 2022. Again, this does not affect the actual HDB interest rate (which stands at 2.6% for now).
Taking immediate effect on 30 September 2022, the government announced a new round of property cooling measures. This is the second round of cooling measures following from the first round in December 2021. Since then, HDB Resale Price Index has increased by more than 5% as of 2Q2022. The new round of property cooling measures is intended to encourage sustainable conditions in the heated property market by tightening borrowing and moderating demand.
