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Source:
www.mas.gov.sg |
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MAS Specifies Guideline for Cash
Rebate Schemes Offered by Banks & Financial Institutions |
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The Monetary Authority of Singapore (MAS)
announced that it will not allow banks and financial institutions granting
housing loans to disburse cash rebates of any amount within a year from the
date the borrower pays up the cash down payment in full. |
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MAS considers such rebates as assisting the
borrower to meet the cash down payment required under MAS' Notices on Housing
Loans. |
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MAS reminds all financial institutions not to
offer any scheme that has the effect of assisting the borrower to meet the
cash down payment in a property purchase transaction. |
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MAS' Notices on Housing Loans restrict the amounts
of housing loans banks and financial institutions can extend to 80% of the
valuation or purchase price of a property, whichever is lower. |
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Of the 20% balance, up to 10% may be met by CPF
funds1. The borrower must pay the remainder with his own cash. The
objectives of this policy are to ensure financial institutions granting
housing loans have a prudent buffer against declines in property prices and to
curb excessive speculation in the property market. |
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MAS is aware that banks and financial institutions
have been offering cash rebates under their housing loan schemes. While
rebates that were small relative to the cash down payment required were not a
matter of concern, it has come to our attention that rebate amounts have
progressively increased. |
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To preserve the policy objectives of the housing
loan rules and to ensure a clear standard for banks and financial
institutions, MAS now requires a one-year lapse from the date the cash down
payment is fully paid to the date the rebate is disbursed. |
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This guideline will apply to all loan applications
received by banks and financial institutions from 6 January 2005, where the
aggregate of the cash rebate together with the total quantum of credit
facilities obtained from financial institutions or the property seller for the
purchase of the property exceeds the maximum amount of financing permitted
under MAS' Notices on Housing Loans. |
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1 For HDB flat purchases, up to 18% may
be met out of CPF funds. This amount will be revised to 16% from 1 Jan 2005 |
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Source:
Monetary Authority of Singapore (MAS)
Press Release 30 Dec 2004 |
No first-year cash rebates for housing loans from 6 Jan 2005
