The Monetary Authority of Singapore says it will keep an eye on "credit practices of FIs (financial institutions) and data trends", and assess if last week's tenure reduction for bank loans for HDB flats should be extended to private home loans.
On Aug 27, MAS trimmed the maximum tenure of new home loans for the purchase of HDB flats and refinancing of such facilities granted by FIs, from 35 years to 30 years.
At the same time, tighter loan-to-value (LTV) limits which previously applied to new loans with tenures exceeding 30 years now apply to loans of more than 25 years.
When asked if MAS plans to extend these to private housing mortgages, its spokesman said that it will "continue to monitor the credit practices of FIs and data trends, and assess if tenure reduction should be extended to loans for the purchase of private properties".
Market watchers reckon a key data trend MAS would be tracking is whether loan tenures for private homes have been creeping up towards the maximum 35 years allowed currently. Such a trend would raise the impetus for MAS to extend the loan tenure cut to the private housing sector.
However, BT understands the reverse situation has surfaced as borrowers would rather seek shorter-tenure loans than suffer a significantly lower LTV limit - by 20 percentage points - for new private home loans exceeding 30 years or where the loan period extends beyond the borrower's retirement age of 65 years.
A banking industry source estimates that the January property cooling measures led to a 20-30 per cent drop in the number of private home loans approved by banks between the first and second quarters of this year. "The introduction of the Total Debt Servicing Ratio (TDSR) in late-June has led to a further decline.
"We've also noticed that developers have been launching new private residential projects at prices lower than what they had earlier aimed for, before TDSR was announced. So you may say that the cooling measures/TDSR have been effective," added the source.
