It is about four months since the new measures to standardize banks’ debt service calculation when granting property loans were introduced on 29 Jun 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
To learn more about TDSR and MSR, click here.
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: