Loan-to-value limit for HDB loans lowered in new property cooling measure; eligible first-time buyers to get higher housing grant

SINGAPORE: The Ministry of National Development (MND) and Housing and Development Board (HDB) on Monday (Aug 19) announced a set of measures to cool the resale market and to provide more support for lower-to-middle income first-time home buyers.
Here is the statement in full:
With effect from Aug 20, 2024, 12am, the Loan-to-Value (LTV) limit for HDB loans will be lowered from 80 per cent to 75 per cent. This brings the LTV limit for HDB loans in line with loans granted by financial institutions, which remains at 75 per cent.
As Prime Minister Lawrence Wong announced in the National Day Rally 2024, the Government will increase the Enhanced CPF Housing Grant (EHG) quantum for both new and resale flats to support first-time home buyers. The EHG will be increased:
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 Government closely monitors the HDB resale market. Earlier rounds of cooling measures and the ramped-up Build-To-Order (BTO) flat supply have helped to moderate the increase of HDB resale prices. HDB resale prices grew by 4.9 per cent in 2023, down significantly from 10.4 per cent in 2022. However, resale prices still rose by more than 4 per cent in the first half of 2024. This was driven by strong, broad-based demand, coupled with some supply tightness, as fewer flats reached their Minimum Occupation Period this year.
To further stabilise the HDB resale market and encourage flat buyers to borrow prudently, the LTV limit for HDB housing loans will be lowered by 5 percentage points from 80 per cent to 75 per cent. The revised HDB LTV limit will apply to complete resale applications that are received by HDB on or after 20 August 2024, as well as BTO applications for the October 2024 BTO exercise onwards. The LTV limit for loans granted by financial institutions remains unchanged at 75 per cent.
First-time home buyers, especially lower-income households, will be less affected by the lower LTV limit, as they receive significant housing grants. To provide further support to lower-to-middle income first-time home buyers, we will also enhance the EHG.
Introduced in September 2019, the EHG is a means-tested grant that provides additional support for lower-to-middle income households buying new or resale flats as their first home. Currently, eligible first-timer families and singles buying a flat can receive up to S$80,000 and S$40,000 in EHG, respectively. The EHG amount is tiered based on household income, with no restrictions on flat type and location. The EHG is progressive, so that lower-income households receive more support for their home ownership aspirations.
Since its introduction, about 72,300 first-timer households have benefitted from EHG, amounting to more than S$2 billion. In the first six months of 2024, about S$204 million in EHG was disbursed to around 7,000 first-timer households. Of the 72,300 first-timer households who received the EHG so far, 4 in 10 bought resale flats while the remaining 6 in 10 bought a flat from HDB across the various sales modes (ie, BTO, Sale of Balance Flats and open booking of flats).
To further support first-time home buyers, the maximum quantum of EHG grants will be increased to S$120,000 for families, and S$60,000 for singles. Depending on the monthly household income, the increase will range from S$5,000 to S$40,000 for families and from S$2,500 to S$20,000 for singles, with higher increases for lower-income households who require more support. See Annex A for the details.
With the revised EHG, plus the existing CPF Housing Grant and Proximity Housing Grant (PHG), first-time home buyers will receive greater help in their flat purchases.
The revised EHG will apply to eligible first-timer households who:
a) Apply for a new flat from the October 2024 BTO exercise onwards
b) Submit a resale flat application on or after Aug 20, 2024
c) Apply for an HFE letter on or after Aug 20, 2024
In the upcoming October 2024 BTO exercise, HDB will offer 8,500 flats across 15 projects under the new flat classification, with additional subsidies for Plus and Prime flats. These flats include a wide range of affordable housing options for buyers with different budgets and needs. With the planned supply of about 19,600 BTO flats in 2024, we are on track to offer 100,000 flats from 2021 to 2025.
Resale flats remain affordable for the vast majority of home buyers. 8 in 10 first-timer families who collected the keys to their resale flats in 2023 used 25 per cent or less of their monthly household income to service their HDB housing loan. This means they can service their monthly loan instalments with their monthly CPF contributions, with little to no cash outlay. HDB flats that are sold at very high prices make up only a very small minority of total resale transactions.
The government remains committed to keep public housing affordable and accessible for Singaporeans. We will continue to monitor the property market closely and adjust policies as necessary to foster a stable and sustainable property market.