New Measures Cool Public Housing Resale Market Ltv Limit Cut Hdb Loans
The Ministry of National Development (MND) and Housing Development Board (HDB) have recently announced measures to contain the HDB resale market and provide support for first-time homebuyers from lower-to-middle-income households.
Effective from midnight on August 20, the loan-to-value (LTV) limit for HDB housing loans will be reduced by 5% from 80% to 75%. This adjustment brings the LTV limit for HDB loans in line with that of financial institutions, which currently stands at 75%.
The revised HDB LTV limit will be applicable to all complete resale applications received by HDB on or after August 20, as well as Build-to-Order (BTO) applications for the October 2024 BTO exercise onwards.
The release stated that the reduction in the LTV limit will have a lesser impact on first-time homebuyers, especially those from lower-income households, as they are eligible for significant housing grants.
During the National Day Rally in 2024, Prime Minister Lawrence Wong announced that the government will be increasing the quantum of the Enhanced CPF Housing Grant (EHG) for both new and resale flats to support first-time homebuyers. The quantum of the EHG will be increased as follows:
– A maximum of $40,000 for eligible first-time families, up from the current maximum of $80,000 to $120,000.
– A maximum of $20,000 for eligible first-time singles, up from the current maximum of $40,000 to $60,000.
The EHG was introduced in 2019 as a means-tested grant to provide additional support for lower-to-middle-income households purchasing new or resale flats as their first home.
Earlier rounds of cooling measures and the increase in the supply of BTO flats have helped to moderate the rise in HDB resale prices to a growth of 4.9% in 2023, down significantly from 10.4% in 2022. However, resale prices have still increased by more than 4% in the first half of 2024, driven by strong and widespread demand, as well as some supply tightness due to fewer flats reaching their Minimum Occupation Period this year.
The announcement stated that the government closely monitors the HDB resale market and, given the strong and widespread demand for HDB resale flats, these measures will help to cool the market and encourage responsible borrowing, ultimately making housing more affordable for first-time homebuyers from lower-to-middle income households.
Source: MND
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