The new MAS regulations to promote financal prudence

[wolfeyes1974]

I absolutely love them!!

taking every loans into consideration to promote financial prudence.

[Distinguido]

Agree with Wolf

[shou.biao.kuang]

I absolutely love them!!

taking every loans into consideration to promote financial prudence.

They should take take a person's luxe watch collection as part of their networth/assets! fair enough as if they were to sell off for cash, that should be considered as cash-on-ahnd since its "liquid" (of course depending on the brand & model)

[shou.biao.kuang]

I absolutely love them!!

taking every loans into consideration to promote financial prudence.

On a serious note, I kudos to them for "plugging" the loopholes to make it water tight! ;-)

[ac_wong75]

From a politics standpoint yes but again what is lacking here the how and do the banks
Have a way to cross share information. Plus lack if details in wat constitute your total
All crucial details to make this work are missing.
So to me it is all air level talk at this point. Sorry to be cynical

[wolfeyes1974]

From a politics standpoint yes but again what is lacking here the how and do the banks
Have a way to cross share information. Plus lack if details in wat constitute your total
All crucial details to make this work are missing.
So to me it is all air level talk at this point. Sorry to be cynical

I believe "total" refers to annual salary + rental income + other declared incomes and fully paid properties (in simple terms). If tax man can calculate tax based on your "worth", banks will likely have access to similar information.

[JonLim]

This is the only country that the government decide the risk factor and covenant for banks.

[Iceheller]

The government should lower the price of HDB flat if they really concern about ppl... Asking young people to pay so much for bloody HDB is financial suicide! Screw those that want to stretch their money thin to make money out of property, the government should not intervene those greedy guys who want to dig their property grave.

[Distinguido]

This is the only country that the government decide the risk factor and covenant for banks.

Not really lah, dude.... Other countries do too, in different ways with different methods

[JonLim]

[QUOTE=Distinguido;783425]Not really lah, dude.... Other countries do too, in different ways with different methods

You are right. Anyway I was with my overseas friends and colleagues and they are the ones that commented that our democratic government initiate actions that can impact businesses and consumer spending overnight without window of discussion or time for market adjustment. I guess it's good that we are so efficient

[Distinguido]

[QUOTE=JonLim;783501]

Not really lah, dude.... Other countries do too, in different ways with different methods

You are right. Anyway I was with my overseas friends and colleagues and they are the ones that commented that our democratic government initiate actions that can impact businesses and consumer spending overnight without window of discussion or time for market adjustment. I guess it's good that we are so efficient

Overly efficient sometimes failing to predict a slew of afer effects.

[OilNGas]

this new ruling makes people who are commission-based or bonus based with low basic even harder to get a good home loan.

[ac_wong75]

I believe "total" refers to annual salary + rental income + other declared incomes and fully paid properties (in simple terms). If tax man can calculate tax based on your "worth", banks will likely have access to similar information.

Hi Wolf good point income information can be acessable. I agree and this is not an issue

But that is just the income side, the purpose of this regulation is ensure your total debt burden does not exceed your total income.
So you need both the debt and income figures to determine how much I can lend out as a bank.

Whilist the income will be base on your IRAS figure, we must understand IRAS figure is last year not current. If you are assessing a loan base you will need current income information delcared which should be easy to get as you jsut get the person to declare to the bank via pay slips and so on.
Problem is more on debt declaration, whilst there is a Credit Bureau, the information submitted at this stage is not really uniform. hence there is a lot work around this area on enhancements and changes which will take time.

Income delcaration is never an issue because human nature is as such that if I want a higher loan quantum I over delcare my income...
It is the debt side of the equation that is an issue. Noboby want to tell the bank I am so **** in debt up to my nostrils, please lend me more....

That being said a combination of under declaration of Debt and over delcartion of income will result in distorted ratio for the banks to lend out and without concrete definitions on Debt burden computations of what to include and how to include, how are ensuring each bank's method is unifrom. Some bank can adopt a very lax method which will then circumvent ths purpose of this law defeating the purpose. Afterall one must always remember loans are assets from a bank's view , hence the larger the loan the bigger income stream..

Which bank will want to kill the goose that lays the golden egg....

While it is good from a political view, I think what I do not like is the lack of substance on this delcaration which in my opinion do more harm than good cheers

[wolfeyes1974]

Hi Wolf good point income information can be acessable. I agree and this is not an issue

But that is just the income side, the purpose of this regulation is ensure your total debt burden does not exceed your total income.
So you need both the debt and income figures to determine how much I can lend out as a bank.

Whilist the income will be base on your IRAS figure, we must understand IRAS figure is last year not current. If you are assessing a loan base you will need current income information delcared which should be easy to get as you jsut get the person to declare to the bank via pay slips and so on.
Problem is more on debt declaration, whilst there is a Credit Bureau, the information submitted at this stage is not really uniform. hence there is a lot work around this area on enhancements and changes which will take time.

Income delcaration is never an issue because human nature is as such that if I want a higher loan quantum I over delcare my income...
It is the debt side of the equation that is an issue. Noboby want to tell the bank I am so **** in debt up to my nostrils, please lend me more....

That being said a combination of under declaration of Debt and over delcartion of income will result in distorted ratio for the banks to lend out and without concrete definitions on Debt burden computations of what to include and how to include, how are ensuring each bank's method is unifrom. Some bank can adopt a very lax method which will then circumvent ths purpose of this law defeating the purpose. Afterall one must always remember loans are assets from a bank's view , hence the larger the loan the bigger income stream..

Which bank will want to kill the goose that lays the golden egg....

While it is good from a political view, I think what I do not like is the lack of substance on this delcaration which in my opinion do more harm than good cheers

My simple thoughts again.

I must say your points are very well valid on the debt declaration. I'm not sure of the level of information that every bank have access from the credit bureau. However, property and car loans are of longer tenure hence don't change very frequently compared to overdrafts (you can't be refinancing a mortgage loan every year which doesn't make sense or car loan for that matter) and we don't buy/change car or property every year (majority of us). This means the information may be easier to extract from credit bureau. Since property and car form the biggest component for most singaporeans' debts so perhaps government can set a weightage for this 2 items followed by others (property - 70%, car - 20% and other categories like home renovation/personal loan/credit card/overdrafts - 10%). This will facilitate the calculation of Total Debt. Sometimes the intention to be very specific/precise complicates matter but simplifying into just 3 categories works easier and bank won't be able to find loopholes.

Income declaration is always easier with last year income tax supplemented with current 3-6 months salary.

Maybe some members here who are finance professional can shed some insights?

cheers

james

[Mezz72]

My housing loan monthly installment is paid fully by CPF. Does this form part of the 60%?