Maximum loan to buy HDB flats lowered to 75%, Enhanced CPF Housing Grant increased to S$120K

Loan-To-Value limit for HDB flats lowered in line with loans from financial institutions

As part of a series of measures aimed at cooling the HDB housing market, the maximum loan allowed to buy flats has been lowered to 75%, from 80%.

The Enhanced CPF Housing Grant (EHG) has also been increased to up to S$120,000.

These moves, which took effect on Tuesday (20 Aug), were announced by the Ministry of National Development (MND) and HDB on Monday (19 Aug) night.

HDB resale prices grew 4.9% in 2023

In a joint press release, MND and HDB noted that HDB resale prices grew by 4.9% in 2023.

Though that’s a significant decrease from 2022, it still rose by more than 4% in the first half of this year.

Thus, there is a need to “further stabilise the HDB resale market and encourage flat buyers to borrow prudently”, they said.

HDB loan-to-Value limit lowered by 5 percentage points

To that end, the Loan-To-Value (LTV) limit for HDB housing loans will be lowered by 5 percentage points.

This will apply to complete resale applications received on or after 20 Aug and BTO applications for the October exercise onwards, the authorities said, adding:

This brings the LTV limit for HDB loans in line with loans granted by financial institutions, which remains at 75%.

First-time home buyers will be less affected by this change as they receive significant housing grants.

EHG increased to up to S$120K for families

In addition, the EHG will be enhanced to further support lower-to-middle income first-time home buyers, MND and HDB said.

First-timers buying a flat now get up to S$80,000 for families and up to S$40,000 for singles.

These maximums will be increased to S$120,000 for families and S$60,000 for singles.

That means that when buying resale flats, families can get up to S$230,000 in housing grants and singles can get up to S$115,000, factoring in the enhanced EHG, CPF Housing Grant and Proximity Housing Grant (PHG).

The revised EHG will apply to eligible first-timers who:

1. apply for a new flat from the October 2024 BTO exercise onwards
2. submit a resale flat application on or after 20 Aug
3. apply for an HDB Flat Eligibility letter on or after 20 Aug

Lower-income households to get more support

The amount of EHG that buyers will get is tiered based on monthly household income.

This is so that lower-income households will receive more support for their home ownership aspirations.

Thus, the increase in EHG might be as low as S$5,000 for families (if the household earns between S$8,501 and S$9,000) and S$2,500 for singles (if the person earns between S$4,251 and S$4,500).

Measures will help cool the market: MND & HDB

The Government remains committed to keeping public housing “affordable and accessible” for Singaporeans, MND and HDB said.

The property market will thus continue to be monitored closely, with policies adjusted so it can be “stable and sustainable”, they added, noting:

Given the sustained, strong, broad-based demand for HDB resale flats, these measures will help cool the market and encourage prudent borrowing, thus making housing more affordable for lower-to-middle income first-time home buyers.

The increase in the EHG was first revealed by Prime Minister Lawrence Wong in his National Day Rally speech on Sunday (18 Aug), when he pledged to “always keep public housing in Singapore affordable” for young Singaporeans.

He acknowledged homebuyers’ concerns over the escalating prices of HDB flats, saying it was due to the disruption caused to the construction industry by Covid-19, leading to the supply of new residential units slowing down and prices going up.

He noted that Singapore’s current House Price-to-Income ratios were in fact significantly lower than most major cities in the world such as London, Sydney or Hong Kong.

However, the Government knows there is still work to be done, and “we are pressing on with efforts to make HDB flats more affordable”, he added.

Also read: National Day Rally: Singles to also get BTO priority access to live with or near parents

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Featured image adapted from Housing & Development Board on Facebook.