Survival of the toughest: TDSR framework to stick around longer than other cooling measures
Stamp duties more likely to storm out of the scene.
Singaporeans are still licking their wounds from property cooling measures that were unleashed in rapid succession, but this good news could perk them up: sellers' stamp duties and additional buyers' stamp duties are likely to go once the home price drops go beyond 10%.
According to OCBC, in the latest round of curbs in Jul-13, the MAS implemented a Total Debt Servicing Ratio (TDSR) framework whereby financial institutions will take into account borrowers’ other debt obligations when granting property loans.
Here's more from OCBC:
A TDSR limit of 60% will be imposed and, for TDSR calculations, a haircut of at least 30% is applied to variable income and eligible financial assets are amortized into income streams.
A mid-term interest rate of 3.5% or the prevailing rate, whichever is higher, will also be used. We believe that the TDSR framework is here to stay while other measures, such as the sellers’ stamp duties and additional buyers’ stamp duties, appear to be more probable candidates for easing if the authorities potentially look to reverse property curbs ahead.
In our view, however, this scenario of policy reversal is only likely to occur when residential price declines in the market have exceeded a meaningful threshold of ~10%.