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A Brief Summary of Cooling Measures
1. Additional Buyer's Stamp Duty (ABSD)
ABSD was first introduced on 7 December 2011 to cool the residential market and revised upwards on 12 Jan 2013 due to further acceleration in the escalation of residential property prices. The latest round of ABSD rate revision was introduced on 16 December 2021. The ABSD rate will depend on the buyer profile as at the date of purchase or acquisition of the residential unit.
2. Sellers' Stamp Duty (SSD)
SSD is payable on all residential properties and residential lands that are bought on or after 20 Feb 2010 and sold within the holding period.
3. Loan-to-Value (LTV) Ratio
Loan to value (LTV) is the housing loan quantum a bank or financial institution is willing to offer as a percentage of the property's valuation.
Additionally, from 16 December 2021 onwards, the LTV limit for HDB housing loans will be tightened by 5% from 90% to 85%. The revised LTV limit does not apply to loans granted by financial institutions, for which the LTV limit remains at 75%.
Thereafter, with effect from 30 September 2022, the LTV limit for HDB housing loans will be lowered by 5% from 85% to 80%. The revised LTV limit does not apply to loans granted by financial institutions, for which the LTV limit remains at 75%.
What is TDSR?
The Total Debt Servicing Ratio (TDSR) is a framework to ensure that people borrow, and banks lend, responsibly. TDSR limits the amount borrowers can spend on debt repayments to 60 percent of their gross monthly income.
Unlike other cooling measures, which are expected to be temporary, the TDSR is a permanent structural reform that all banks and financial institutions must follow when assessing:
housing loans,
the refinancing of housing loans, and
loans secured by property.
The TDSR was introduced to strengthen credit underwriting practices by financial institutions. Loans are only issued to borrowers who can afford them.
How does the TDSR affect you? The TDSR limits the amount you can borrow (your loan quantum) by ensuring your monthly repayments account for less than 60 percent of your income. For HDB flats and ECs, mortgage repayments must not account for more than 30 percent of a borrower's gross monthly income, even if they have no other debt obligations. (See Mortgage Servicing Ratio)
