No extension of property rule to other loan types

SINGAPORE - The total debt servicing ratio (TDSR) that now applies to property loans will not be extended to other types of loans any time soon, Deputy Prime Minister Tharman Shanmugaratnam said on Sunday.

"We don't intend to, any time soon, extend the TDSR to other types of loans, but it's really for the banks to factor it into their own internal assessments," Mr Tharman, who is also the Finance Minister, said on the sidelines of a grassroots event in Jurong.

"Supervision is more useful when it comes to the broad range of loans, not just more and more rules," he added.

The TDSR framework, introduced last month for property loans, takes into account a borrower's total repayments such as those on mortgages, car and student loans.

Banks have to ensure that the total monthly debt repayments of those taking up property loans do not exceed 60 per cent of their gross monthly income.

The Monetary Authority of Singapore has said that it was closely monitoring the lending practices of banks and data trends for non-property loans, and may consider applying the TDSR rules for other loan types.

Mr Tharman said a rough assessment was that 5 to 10 per cent of borrowers were at risk of being overleveraged, with interest rates set to rise.

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