Home loan curbs 'will hit older buyers'

Home loan curbs 'will hit older buyers'

Investors in a weak financial position and buyers in their 40s and 50s will feel the effects of the latest property rules most acutely, analysts say.

The changes, unveiled by the Monetary Authority of Singapore last Friday, are similar, in effect, to higher interest rates, they said.

Some older buyers who already have a loan may abandon plans to buy an investment property, the analysts added.

The central bank set a maximum of 35 years on all home loans. For new loans, the loan-to-value ratio has been lowered if the loan exceeds 30 years, or if the loan period extends beyond the retirement age of 65.

Savills Singapore research head Alan Cheong said the "weak investor" can come from any age group. An example would be someone in his 40s earning less than his peers who wants to get ahead by entering the property market, thinking he can make money in the rental market.

"The new rules create an effect similar to rising interest rates, and increase the monthly cash outflow of home buyers," he said.

Older buyers will be forced to take shorter loans if they do not wish to pay a larger amount upfront. In some cases, the monthly rental received from these properties may not even be sufficient to cover their monthly mortgage.

R'ST Research director Ong Kah Seng said: "Most investors will rethink buying the property if the monthly repayment exceeds the monthly rental, unless there are other sources to make up for the shortfall."

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