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
For property loans where the OTP is granted on or after 16 December 2021, the total debt servicing ratio (TDSR) threshold is set at a maximum of 55% of the borrower's monthly income. Monthly debt obligations count towards this threshold. Exceptions exist for certain situations.
Calculating TDSR Thresholds
The total debt servicing ratio (TDSR) threshold for property loans is set at a maximum of 55% of the borrower’s monthly income.
Monthly debt obligations count towards a borrower's TDSR. For example, if a borrower has existing monthly debt obligations equal to 10% of their monthly income, then the maximum amount they can get for a property loan is based on 45% of their monthly income.
Loans Exceeding the Threshold
MAS expects property loans subject to the TDSR framework to not exceed the maximum TDSR threshold of 55%. Loans above the 55% threshold should only be granted in exceptional cases.
FIs should have processes in place to evaluate, document and report such loans. They are required to:
- Document clearly the exceptional reasons for granting property loans above the threshold.
- Subject these exceptional cases to enhanced credit evaluation.
- Implement a debt reduction plan with borrowers under these exceptional cases.
- Report all such exceptional cases to MAS.
For details of each requirement, refer to the table:
Subject exceptional cases to enhanced credit evaluation
|Implement debt reduction plans (for refinancing of loans)||
The borrower must commit to a debt reduction plan with the FI.
|Report such cases to MAS||
All loans exceeding the 55% threshold must be reported to MAS. At minimum, the report should include: