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Monetary Authority of Singapore introduces cap on property buyers | 2 July 2013

Monetary Authority of Singapore introduces cap on property buyers | 2 July 2013

A dramatic new spending cap has been placed on property buyers in Singapore.

The country’s central bank has advised lenders to turn down any property loans which involve consumers spending more than 60 per cent of their monthly income on repayments.

The new rules, which will apply to both residential and commercial buildings, will be introduced in an effort to prevent property prices spiralling out of control.

According to wsj.com, they have been rising relentlessly ever since the country recovered from the global financial crisis. Interest rates have been incredibly low across the country since this time, thanks partly to repeated rounds of quantitative easing from Western central banks.

The Monetary Authority of Singapore (MAS) has introduced several curbs to prevent property bubbles in recent years. In a statement cited by reuters.com, the body claimed that the new total debt servicing ratio will stop investors being caught out by a sharp rise in interest rates.

It is also hoped that the new rules will strengthen underwriting practices amongst the country’s banks and encourage stronger financial prudence by borrowers in general. Any loans secured by property or re-financing deals will be subject to the same conditions.

Businesstimes.com.sg reports that the new lending criteria comes into play on July 29.

The views expressed in this post are those of the author and are not necessarily those of Qube Global Software. All facts are verified where possible directly by the author.

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Posted by Matt Roobol

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