ST Forum : New measures help more first-time buyers to own flats

26 JAN 2011,
New measures help more first-time buyers to own flats

THE measures introduced in August last year and this month aim to stabilise the property market ('Genuine buyer's problems' by Mr Adam Reutens-Tan; Jan 18).

Together with the increased supply of housing units, they help more first-time buyers to own their homes.

The lower loan-to-value (LTV) limit of 60 per cent is meant to encourage financial prudence and reduce non- urgent housing demand.

Only buyers who take bank loans to buy a second property, while they have an existing loan for their current property, are affected.

Households earning up to $8,000 that wish to upgrade or downsize to another flat are not affected if they are eligible for an HDB concessionary loan. They may apply for an HDB loan of up to 90 per cent LTV, subject to credit assessment.

We urge flat sellers to carry out financial planning and consider their housing arrangements before committing to buy another property.

If they do not have sufficient cash or Central Provident Fund savings to pay the down payment for their next property due to the lower LTV limit, they should reconsider their decision to avoid overstretching themselves.

Alternatively, they can discharge their outstanding housing loan or sell their existing property before buying another.

Otherwise, when interest rates eventually rise, those who have over-extended themselves in property purchases may be severely affected.

Although the measures may inconvenience some home owners, they will help foster a more stable and sustainable property market, which will be beneficial to all stakeholders in the long run.

HDB will also continue to monitor the market closely to ensure that there is enough flat supply to meet demand.

Chan-Wong Jee Choo Lily (Mrs)
Deputy Director (Policy & Property)
Housing & Development Board