When the Monetary Authority of Singapore (MAS) implemented the Total Debt Servicing Ratio (TDSR) framework last June, it threw a rock in the home loan and mortgage system and made it difficult for many to get a home loan. For some who have already purchase properties prior to this new ruling, it made re-financing difficult and impossible.
The authorities have realised that the property market dynamics have been thrown rather out of whack ever since the new rules kicked in, and to prevent a rapid downward spiral of property prices, they have now eased up on the mortgage rules. More home owners are now exempted from the noose of the rules, but only those who have purchased prior to June 2013, and only for properties they are currently living in.
The main purpose behind this exception is to help households for whom refinancing may be the only way to keep the total debt ratio down. Instead of having to be forced to sell the roof over their heads, no matter how expensive the roof may be, they will now be able to find a little wriggle room. According to property analysts, this move will not affect new buyers, thus home prices and sales transactions may still be lower than before. Buying demand has been decreasing for a couple of quarters now.
Home prices are expected to dip 5 per cent this year, and with the looking oversupply starting in 2015, an even further drop of 5 to 15 per cent next year. In an industry that is all about timing, smart buyers will begin keeping a keen eye on what to buy and what not to buy.