Three tweaks to EC scheme

Three tweaks to EC scheme

SINGAPORE- The executive condominium (EC) scheme has been tweaked to bring the terms for ECs closer to that for public housing and to support a stable and sustainable EC market.

The Ministry of National Development said yesterday that there will be three changes following a review, which took into account feedback from the Our Singapore Conversation.

The first change involves the Mortgage Servicing Ratio (MSR) for EC housing loans from financial institutions for units bought directly from developers. The MSR, imposed by the Monetary Authority of Singapore (MAS), will be capped at 30 per cent of gross monthly income and will apply to purchases where the option-to-purchase is granted today and hereafter.

Previously, the MSR did not apply to ECs. Analysts see this as an effective move to cool demand for this class of housing.

Ong Kah Seng, director at R'ST Research, said the implementation of a total debt servicing ratio (TDSR) framework shifted the demand for private housing towards ECs. This is because HDB monthly mortgage payments were not factored into TDSR calculations.

Mr Ong said: "This measure will ensure that buyers purchase ECs in accordance with their earning capacity and that developers cannot excessively raise prices since, going forward, the pool of eligible EC buyers might shrink."

Nicholas Mak of SLP International said that with the MSR cap, the quantum that homebuyers can pay - assuming an 80 per cent loan over 25 years taken out by a couple with $12,000 in combined monthly income - comes up to about $950,000.

The prices of popular four- and five-room EC units now start at $1 million, he said.

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