Oct 11, 2012 | 0 Comment(s)
Singapore has tightened its controls on real estate lending to quash symptoms of a property bubble.
Singapore’s Monetary Authority said in an issued statement that it will enforce a maximum tenure of 35 years for new housing loans.
"MAS' move is part of the government's broader aim of avoiding a price bubble and fostering long-term stability in the property market," the central bank said.
"The maximum tenure of all new residential property loans will be capped at 35 years. In addition, loans exceeding 30 years tenure will face significantly tighter loan-to-value limits."
Singapore’s central bank said in a separate statement that the MAS’s move “is part of the government’s broader aim of avoiding a price bubble and fostering long-term stability in the property market.”
Moreover, “the maximum tenure of all new residential property loans will be capped at 35 years. In addition, loans exceeding 30 years tenure will face significantly tighter loan-to-value limits.”
CIMB Research told AFP that the move was to subdue fears of a property bubble stemming from the easy-to-access credit regime and low interest rates.
MAS chairman Tharman Shanmugaratnam noted that this is an early preventive measure if interest rates will change and move upwards.
Higher interest rates could leave borrowers with difficulty to pay up their property loans and derail the financial system.
“We are taking this step now to require more prudent lending and will continue to watch the property market carefully,” Mr. Shanmugaratnam said in the statement.
Sources: Agence France Presse, Monetary Authority of Singapore
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