Sunday, June 28, 2015

MSR vs TDSR

MSR ( Mortgage Servicing Ratio)
TDSR (Total Debt Servicing Ratio)
The monthly repayment of a mortgage do not exceed 30% of the borrower's gross income
All monthly debt obligations, inclusive of the mortgage repayment, do not exceed 60% of the borrower's gross monthly income

Applies to all mortgages, whether by FIs or HDB, granted for the purchase of a HDB flat or an EC
Applies to all property loans, whether residential properties or otherwise, granted by FIs

Hence HDB concessionary loans are exempted from it
When computing the MSR, the FI has to use a specified medium-term rate (3.5%), or the existing market rate, whichever is higher.

For the HDB concessionary loan, the rate to be used is the prevailing rate of the loan which has remained at 2.60% p.a. since July 1999.

    When computing the TDSR, the FI has to use a specified medium-term rate, or the existing market rate, whichever is higher.

    The specified rate:
    • 3.5% for housing loans
    • 4.5% for non-residential property loans
    For refinancing,

    the MSR will not apply to loans for HDB flats and ECs that are
    • owner-occupied, AND
    • were purchased before their respective MSR implementation dates

    For refinancing,

    the TDSR will not apply if
    • the residential property is owner-occupied, AND
    • the Option to Purchase (OTP) of the residential property was granted before 29 June 2013