New Measures Cool Public Housing Resale Market Ltv Limit Cut Hdb Loans
The Ministry of National Development (MND) and Housing Development Board (HDB) have jointly announced measures to address the recent surge in HDB resale market prices. These measures aim to cool the market while providing more support for lower-to-middle-income first-time homebuyers.
Effective midnight on August 20, the loan-to-value (LTV) limit for HDB housing loans will be reduced by 5% from 80% to 75%. This brings the LTV limit for HDB loans in line with those granted by financial institutions, which have remained at 75%. This revised limit will apply to complete resale applications received by HDB from August 20 onwards, as well as Build-to-Order (BTO) applications for the October 2024 exercise.
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According to the joint announcement, the impact of the lower LTV limit will be less for first-time homebuyers, especially those from lower-income households, as they are eligible for significant housing grants. In fact, in the National Day Rally 2024, Prime Minister Lawrence Wong had announced an increase in the Enhanced CPF Housing Grant (EHG) quantum for both new and resale flats to support first-time homebuyers. The EHG will see an increase of up to $40,000 for eligible first-timer families, bringing the maximum grant amount to $120,000 from the current $80,000. Eligible first-timer singles will also receive an increase of up to $20,000, raising the maximum grant amount to $60,000 from the current $40,000.
Introduced in September 2019, the EHG is a means-tested grant that provides additional support for lower-to-middle-income households purchasing new or resale flats as their first home. While earlier cooling measures and a ramped-up supply of BTO flats have helped to moderate the rise in HDB resale prices, the first half of 2024 still saw an increase of over 4% due to strong and widespread demand, as well as some supply tightness as fewer flats reached their Minimum Occupation Period this year.
“The government closely monitors the HDB resale market,” stated the announcement. “Given the sustained, strong, broad-based demand for HDB resale flats, these measures will help cool the market and encourage responsible borrowing, thus making housing more affordable for lower-to-middle-income first-time homebuyers.”