Dear Editor,

We thank Mr Ong Kim Bock for his letter, “Allow similar exemption from TDSR for loan repricing” (TODAY, 22 March 2017).

Mr Ong suggested not applying the total debt servicing ratio (TDSR) to the refinancing of housing loans used to purchase investment properties if the loan-to-value ratio does not exceed 50%.

The relaxation of the TDSR rule that took effect on 11 March applies only to mortgage equity withdrawal loans, which are loans secured on existing properties. This is to help individuals, particularly retirees, to monetise the equity in properties that they already own.

The change does not apply to the refinancing of an investment property loan.

Nonetheless, a financial institution may refinance a borrower’s investment property loan above the TDSR threshold of 60%, if the borrower commits to a debt reduction plan and fulfils the financial institution’s credit assessment.

This provides some flexibility for borrowers to refinance their investment property loans. At the same time, it encourages borrowers to right size their loans, so that they will be less vulnerable to future interest rate increases or any loss of income.

We have reached out to Mr Ong to explain this to him.

Bey Mui Leng (Ms)
Director (Corporate Communications)
Monetary Authority of Singapore