Guidelines for all financial institutions on how to apply the total debt servicing ratio (TDSR) to property loans.
Total Debt Servicing Ratio for Property Loans
Financial institutions (FIs) must compute the total debt servicing ratio (TDSR) of borrowers who apply for property loans.
The total debt servicing ratio (TDSR) is a maximumset by MAS. However, FIs may grant property loans to borrowers whose TDSR exceeds the threshold on an exceptional basis, subject to enhanced credit evaluation.
Why Is TDSR Required?
Property loans can be large, long-term liabilities for most individuals and households. TDSR limits ensure that borrowers are not over-leveraged for property purchases.
TDSR helps to:
- Strengthen the credit underwriting practices of FIs.
- Encourage financial prudence among borrowers.
- Ensure long-term sustainability in the property market.