It is about four months since the new measures to standardize banks’ debt service calculation when granting property loans were introduced on 29 June 2013.
To recap, the 2 debt service calculations are:-
(1) Total Debt Servicing Ratio (TDSR) < 60%
Total monthly payments on all loan payments including new property loan must not exceed 60% of total gross income
(2) Mortgage Service Ratio (MSR) < 30% (applicable to HDB flat only)
Total monthly payment on HDB loan must not exceed 30% of total gross income
It is evident that during the past few months, the new debt servicing policy has affected certain groups of property buyers/owners more than others. Let’s look at the ‘after-effects’ felt by the affected groups: