Reply to Parliamentary Question on efforts to catalyse reverse mortgages
NOTICE PAPER 768 OF 2017
FOR SITTING ON 1 AUGUST 2017
QUESTION NO 556 FOR WRITTEN ANSWER
Date: For Parliament Sitting on 1 August 2017
Name and Constituency of Member of Parliament
Mr Kwek Hian Chuan Henry, MP, Nee Soon GRC
To ask the Prime Minister (a) whether there are any efforts to catalyse reverse mortgages for private housing; and (b) whether there are any guidelines and laws that govern reverse mortgages for private housing including the level of interest charged for reverse mortgages.
Answer by Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS:
1 Financial institutions (FIs) are allowed to offer reverse mortgages. In fact, some FIs did offer reverse mortgages in the past but ceased doing so when they found a lack of demand.
2 The terms for reverse mortgages, including applicable interest rates, are set on a commercial basis, taking into account factors such as cost of funding and credit risk.
3 The Government has been looking at options to help Singaporeans better monetise their housing assets. For example, MAS announced in March 2017 that mortgage equity withdrawal loans need not be subject to the total debt servicing ratio (TDSR) framework if the loan amount is less than 50% of the market value of the property. This will help retirees – many of whom would have paid up most of their outstanding housing loan – monetise part of the value of their property.
4 There are alternatives to reverse mortgages or mortgage equity withdrawal loans. For instance, a property owner can choose to let out his property or a room for rental income. Eligible HDB flat owners may also monetise or right-size their flats through HDB's Lease Buyback Scheme or Silver Housing Bonus respectively.
5 The Government will continue to review its policies to facilitate monetisation options that are relevant to meet the retirement needs of Singaporeans.