MAS: Property cooling measures will not ease "anytime soon"

It will be a while before the cooling measures will be lifted

Reiterating the government’s long-held position, the Monetary Authority of Singapore (MAS) said that property cooling measures were here to stay amid falling home prices.

The recent tweaks to refinancing rules will make it easier for home owners to refinance their mortgages, but it “doesn’t represent an easing at all,” said MAS managing director Ravi Menon.

The move was made to lighten their debts, rather than to encourage an uptake of housing loans, he explained.

“If you look for a prop up to the market, this is not going to help as it doesn’t apply to new loans,” Mr Menon said.

“This is to improve financial prudence without creating new demand for housing loans,” he added. “We won’t ease anytime soon.”

Earlier September, MAS lifted a cap on the amount home owners could borrow to refinance existing mortgages.

These owners could previously borrow up to 60 percent of their expected income, and less if they had taken up car or study loans. Now, there are no such restrictions on owner-occupiers, following changes to the Total Debt Servicing Ratio framework that took immediate effect.

The cap of 60 percent will still apply when owners are taking up fresh home loans. Still, a few experts saw the surprise move as a shift toward the easing of property curbs. The framework was mooted in 2013 to sooth demand and curb rising home prices.

It is part of a slate of property curbs, some introduced as early as 2009 by the government to cool the market. Other measures include an additional stamp duty tax on foreigners, and residents who were acquiring their second property or more.

Bloomberg reported that home prices have declined by 9.4 percent from their peak in 2013, against a backdrop of slow economic growth and a tick up in unemployment rates.

Check out Bloomberg for the full report.

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