According to a news report today, home owners are finding it difficult to refinance their homes in the current backdrop of falling home prices. Many home owners who failed to meet the TDSR criteria or the banks’ credit assessment criteria could not refinance their homes. However MAS seems not to be very worried of the implications. Accordingly less than 10% of existing borrowers have a TDSR of above 60%. This number is expected to reduce as the loans are repaid over the years.
Should the refinancing option is off the table for home owners, possibly for most the only option is to sell off the property even at a loss.
MAS stated that TDSR objectives are gradually met. Almost all new loans were below the threshold of 60%, with quite a significant number of new loans having TDSR of below 40%. The overall objective of TDSR is to encourage prudent financial management among households by reducing the growth of household debt.