MND today announced further cooling measures, targeted at the Executive Condominiums (ECs) segment. According to them, it is to bring ECs in line with HDB measures. We think the 30% Mortgage Servicing Ratio (MSR) implementation is more painful than TDSR.
Reduction of cancellation fees
From 20%, these fees are reduced to 5% of the purchase price. This should help buyers who signed on the dotted line but backed out of the sale due to reasons such as not proceeding with marriage.
Implementation of resale levy for second-timer applicants
Similarly to second-timer applicants of BTO flats, EC buyers now have to pay a resale levy. Projects launched from 9 December including on-going land tenders will be impacted. We think existing projects with remaining stock should see an uptake.
Implementation of 30% MSR
HDB implemented the MSR at 30% of gross monthly income for BTO and resale flats. It had an effect on borrowing limits. Basically, the monthly repayments cannot exceed 30% of combined monthly gross income. Our previous analysis has detailed breakdown of the cooling measures. Coincidentally, we just released our thoughts today on how the declining COV can help buyers with their MSR. The article is apt for EC too.
Unsure about your borrowing capability? Assess your MSR followed by TDSR.
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