Explainers
 Published Date: 05 July 2018

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.

Applies to: Full Bank (Locally Incorporated) , Full Bank (Branch) , Finance Company , Merchant Bank (Locally Incorporated) , Merchant Bank (Branch)

Overview

The total debt servicing ratio (TDSR) is a maximum threshold set 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.

It also complements the existing loan-to-value (LTV) limits on property purchases.

Next Calculating TDSR for Property Loans