assume a drastic fall in prices

[woofwoof]

As above, what happens to your bank loan?

Say property bought for 1mil, paid 20% deposit. Bank loan 800k.
If price fall 30% and now worth 700k.. thus there's a diff of 100k.

What will the bank do? Top up 100k? Put that 100k into the principal?

[newbie11]

As long as u service loan on time in full, no worries

[Reisor]

As above, what happens to your bank loan?

Say property bought for 1mil, paid 20% deposit. Bank loan 800k.
If price fall 30% and now worth 700k.. thus there's a diff of 100k.

What will the bank do? Top up 100k? Put that 100k into the principal?

Negative equity. Think bank will usually take action only if owner default on mortgage payment, there should be some guide from regulator MAS. Most apparent in 97-98 Asian Financial Crisis, did not hear of owners having to top up. Perhaps others can share.

[sgbuyer]

Nowadays jungle law liao.

GS recall full loan without asking for margin. Notice given: 90 minutes.

[玉格格]

the bank wun ask u to top up meh?
my fwen ppty appreciated n bank told her tat she can effectively borrow more.

[proud owner]

the bank wun ask u to top up meh?
my fwen ppty appreciated n bank told her tat she can effectively borrow more.

banks are loaded with cash .... dun know where to invest ... kana controlled by govt not to expand housing loan portfolio ..

so they hold tight tight to existing loans as long as borrower don't default on payment ...

if valuation increase ... of course they encourage you to take more cos your rating better now with the improved valuation ..

[minority]

As above, what happens to your bank loan?

Say property bought for 1mil, paid 20% deposit. Bank loan 800k.
If price fall 30% and now worth 700k.. thus there's a diff of 100k.

What will the bank do? Top up 100k? Put that 100k into the principal?

Own stay 1 unit unlikely as long u service ur loan. Investment now currently with ABSD and TDSR. unlikely u will fall below.

unless black swan no JOB.. then all bets are off have to talk to band to restructure before miss payment.

Thus it better to have cash flow to tong the rough times if sway.

[minority]

the bank wun ask u to top up meh?
my fwen ppty appreciated n bank told her tat she can effectively borrow more.

bank are also worry a domino effect. As long as the loanee continue to pay the loan negative equity they will still not rock the boat. Imagine force sell the unit and that impact valuation which could pull other unit further down negative. can cause all loan to crash.

The most important rule in lending $. u can beat up the loanee. but don't kill him. A dead Loanee can't pay back a single cent.

[relax88]

As above, what happens to your bank loan?

Say property bought for 1mil, paid 20% deposit. Bank loan 800k.
If price fall 30% and now worth 700k.. thus there's a diff of 100k.

What will the bank do? Top up 100k? Put that 100k into the principal?

Bad doggy, how can you use my computer while I am out. Later dont feed you, then you know

[玉格格]

banks are loaded with cash .... dun know where to invest ... kana controlled by govt not to expand housing loan portfolio ..

so they hold tight tight to existing loans as long as borrower don't default on payment ...

if valuation increase ... of course they encourage you to take more cos your rating better now with the improved valuation ..

but now valuation increase oso no use. gena hindered by tdsr, how to borrow more?

[Simi]

but now valuation increase oso no use. gena hindered by tdsr, how to borrow more?

Effectively "break" up the loan into 2 or 3 parts ?

[玉格格]

Effectively "break" up the loan into 2 or 3 parts ?

huh? means wat? explain properly leh. now trying hard to find ways for bank to lend me $

[minority]

but now valuation increase oso no use. gena hindered by tdsr, how to borrow more?

during the 97 crash. many people die becoz of buy property and then take a reverse mortgage and then buy another unit and so on. when the music stop. many people die.

This round TDSR will put a stop to these madness...

[Simi]

huh? means wat? explain properly leh. now trying hard to find ways for bank to lend me $

Never tried before also

let the banker go and think about it

but if they know what I am thinking about...workable

[玉格格]

during the 97 crash. many people die becoz of buy property and then take a reverse mortgage and then buy another unit and so on. when the music stop. many people die.

This round TDSR will put a stop to these madness...

banks will soon find a way to lend, else their bottomline suffer.

[minority]

banks will soon find a way to lend, else their bottomline suffer.

slowly slowly raise interest rates. TDSR. many cannot just happy happy refinance liao. esp those over leverage one Kiap tiao.


But cannot raise too fast hor.. must boil the frog slowly….

So don't happy happy go buy House then go cheong a Car or…. coz 2-3 yrs later want to refinance realized kana kiap! Who to blame.. blame oneself never earn enough or never plan properly. Car is a waste of $ anyway.

[oops]

Its called margin call.

[EBD]

As above, what happens to your bank loan?

Say property bought for 1mil, paid 20% deposit. Bank loan 800k.
If price fall 30% and now worth 700k.. thus there's a diff of 100k.

What will the bank do? Top up 100k? Put that 100k into the principal?

Not sure what the practice is now, but back in AFC one of my direct reports got call from bank to top up. Not sure if it's because he miss payment, CPF cut did happen then so if he calculated so tight then that could have affected him - along with the high interest rate.

When planning to buy it's wise to go through what-if scenarios rather than just the future is rosy outlook.

Golden rule.
Never trust a banker - they will lend you an umbrella when the sun is shining and demand it back when it starts to rain.

[玉格格]

slowly slowly raise interest rates. TDSR. many cannot just happy happy refinance liao. esp those over leverage one Kiap tiao.


But cannot raise too fast hor.. must boil the frog slowly….

So don't happy happy go buy House then go cheong a Car or…. coz 2-3 yrs later want to refinance realized kana kiap! Who to blame.. blame oneself never earn enough or never plan properly. Car is a waste of $ anyway.

hit tdsr limit not necc over leverage leh ...

they intervene too much liao. they even wanna hv a say on how i use my salary by imposing tdsr on my credit limit!

[minority]

hit tdsr limit not necc over leverage leh ...

they intervene too much liao. they even wanna hv a say on how i use my salary by imposing tdsr on my credit limit!

Well when people Kana burn they will KPKB why ah gong never warn them. look at the gold bullion investors… must go protest ask government must help then. even question why MAS never regulate.

So wats the moral of the story? when make $ all happy danny why ah kong block the way. when loose $ all KPKB say ah kong never stop them.

[Kelonguni]

Maybe this is one reason why LTA regulates that car loans can only be capped at 50%. If crash happens, the buyer would have already paid for the losses and banks won't be impacted even if buyer walks away.

Same for houses I guess. Buyers would have paid up 20-40% or more, so there is lots of buffer to lose if a crash happens.

Unless we are talking about crashes beyond 40 or 50%.

[玉格格]

Maybe this is one reason why LTA regulates that car loans can only be capped at 50%. If crash happens, the buyer would have already paid for the losses and banks won't be impacted even if buyer walks away.

Same for houses I guess. Buyers would have paid up 20-40% or more, so there is lots of buffer to lose if a crash happens.

Unless we are talking about crashes beyond 40 or 50%.

its fine as to how they wanna specify the extent of down pymt; 20%, 30% 50% ... at least u r fair to everyone. but they shd not interfere how I allocate my resources mah. if a person earns $20k per mth, clearly he can easily afford a tdsr of 70%!
however, if he only earn $2.5k per mth, setting a tdsr of 60% is clearly giving the person a wrong direction!

[Kelonguni]

its fine as to how they wanna specify the extent of down pymt; 20%, 30% 50% ... at least u r fair to everyone. but they shd not interfere how I allocate my resources mah. if a person earns $20k per mth, clearly he can easily afford a tdsr of 70%!
however, if he only earn $2.5k per mth, setting a tdsr of 60% is clearly giving the person a wrong direction!

Just save a few years more and down payment more lor...

Unless you are so near retirement age. But to banks the risks are high if you are old too.

The main thing is to match the earnings with the prices. Else the system is in trouble.

[minority]

its fine as to how they wanna specify the extent of down pymt; 20%, 30% 50% ... at least u r fair to everyone. but they shd not interfere how I allocate my resources mah. if a person earns $20k per mth, clearly he can easily afford a tdsr of 70%!
however, if he only earn $2.5k per mth, setting a tdsr of 60% is clearly giving the person a wrong direction!

Its fair wat. u have more $ u can afford more and u have less $ u can afford less. a 2.5K person looses his job or kana a margin call or if interest move up against him. Its the same a up in interest on say a 1M prop can be $300-500. which for a 2.5K person after servicing loan.. is very chuan.

If u have a lot of income u can play more also loose more. its a fair world.

[玉格格]

Just save a few years more and down payment more lor...

Unless you are so near retirement age. But to banks the risks are high if you are old too.

The main thing is to match the earnings with the prices. Else the system is in trouble.

if cannot get a loan, save a few more yrs will not solve the problem at all unless one save for 20 or 30 yrs more, haha

[minority]

Just save a few years more and down payment more lor...

Unless you are so near retirement age. But to banks the risks are high if you are old too.

The main thing is to match the earnings with the prices. Else the system is in trouble.

perhaps the current prices are deep too high n peaked. a sharp 20-30% can put some people currently in negative equity very fast. and couple with a job lost. n interest rate hike.

Die Cxxk stand.

[玉格格]

Its fair wat. u have more $ u can afford more and u have less $ u can afford less. a 2.5K person looses his job or kana a margin call or if interest move up against him. Its the same a up in interest on say a 1M prop can be $300-500. which for a 2.5K person after servicing loan.. is very chuan.

If u have a lot of income u can play more also loose more. its a fair world.

the moment they implement a blanket rate across the board, they hv alrdy failed to recognise the absolute income tat is available to each person.

precisely when a person earns more, he has more $, hence he dun nid such a small percentage of tdsr limit.
the 20k earner with a tdsr of 75% has more liquidity as compared to someone who earns $2.5k wif a tdsr of 60%!

[minority]

the moment they implement a blanket rate across the board, they hv alrdy failed to recognise the absolute income tat is available to each person.

precisely when a person earns more, he has more $, hence he dun nid such a small percentage of tdsr limit.
the 20k earner with a tdsr of 75% has more liquidity as compared to someone who earns $2.5k wif a tdsr of 60%!

Well its a blunt tool. There are savvy people and not savvy people. it cannot be implemented only for low pay scale folks who have higher risk only coz it would not be deem fair.

Also maybe they are seeing a possible drop when interest spike. Some who over leverage with interest spike can easily hit their limit.

But remember the intention is to take the demand out of the market. basically is stoping people from using leverage to over do it. once that demand is take out should see price drop and throw in interest rate hike. Can get guys for some.


Also don't mean the cash rich are savvy also. I have seen people who make a 5 6 digit salary who leverage to the hilt and do reverse mortgage. So if die can be very ugly.

[CCR]

The gahmen has no choice...

Short of ration-ing the number of properties one can buy or a complete ban on the number of properties one can buy, they have to use ABSD, TDSR to prevent people from buying...

There are just too much cash sitting around that they cannot build enough properties to satisfy the demand... hence they just use a blunt too...

I totally agree TDSR shouldnt apply to high income bracket, but they cannot be seen as being unfair to lower / middle income residents...

This just shows me one thing, with china, India and Indonesia rising, and singapore being a calm oasis in this region, prices will not drop unless there is a global crisis....

This just makes me more determined to own more properties in singapore to keep and rent out...

We are just too small a country, so just a trickle coming in to buy our properties and we will have a shortage of supply

[玉格格]

But remember the intention is to take the demand out of the market. basically is stoping people from using leverage to over do it. once that demand is take out should see price drop and throw in interest rate hike. Can get guys for some.

Also don't mean the cash rich are savvy also. I have seen people who make a 5 6 digit salary who leverage to the hilt and do reverse mortgage. So if die can be very ugly.

aiya, cash rich hv high & low spenders; like wise low earner hv both thrifty n big spenders.
my point is the limit they set can only deter demand, but it doesn't really reduce the probability of a default borrower.