Singapore Government Press Release

HDB has refined its mortgage financing policy for flat owners seeking a second mortgage loan for the purpose of lateral movement or downgrading.

2 In 1997, HDB implemented a revised mortgage financing policy to bring its mortgage financing closer to market practice and to rationalise the mortgage loan subsidies for the purchase of HDB flats. Among the measures implemented were the introduction of credit assessment for granting mortgage loans and limiting buyers of HDB flats to two concessionary loans.

3 With effect from 1 October 99, HDB flat owners who have enjoyed one housing subsidy, either in the form of the CPF Housing Grant or a direct-purchase flat from HDB, will no longer be granted a second mortgage loan at concessionary interest rates when they move laterally or downgrade. Those who upgrade to a larger flat, however, will not be affected by this policy revision.

4 From the housing perspective, there is no need for an HDB flat owner to move laterally to a similar-sized flat or downgrade to a smaller flat. Those who do would have sufficient funds from the sale of their existing flats to finance the purchase of their new flats. HDB will therefore stop granting second concessionary loans to these mortgagors. However, they can still obtain a second mortgage loan from HDB but they will have to pay market interest rates.

5 The revised mortgage financing policy will apply to affected HDB flat applicants who are shortlisted to book flats from the 4th Quarter 1999 Booking Exercise onwards. From 1 October 1999, it will also apply to affected persons who submit an application to HDB to buy a resale flat.

6 Existing applicants on the Registration for Flats (RFS) waiting list who are affected by the revised policy may request to change their applications or cancel them. Those who do so within the next 3 months up to 4 December 1999 will be exempted from the usual penalties like the 3-month set-back in the registration number for change of flat-type, or the forfeiture of the registration fee for those who cancel their application.

7 The revised policy will not affect existing mortgagors who have been granted a second concessionary loan before 1 October 1999. They will continue to enjoy concessionary interest rates on their existing mortgage loans for the rest of their repayment period.

8 There is also no change to the current policy of charging market interest rates on mortgage loans granted to the following categories of buyers or transferees of HDB flats:

(a) Singapore Permanent Residents;

9 For enquiries, the public may contact HDB through the following channels:

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Issued by : Ministry of National Development

Date : 4 Sep 99