TDSR fine-tuning not easing of cooling measures but still largely positive

SINGAPORE (Sept 5): When the Monetary Authority of Singapore (MAS) announced changes to the Total Debt Servicing Ratio (TDSR) framework last Thursday, the regulatory authority made it clear that it was not the easing of property cooling measures that some are hankering after.

MAS said in a statement that refining the refinancing rules under the TDSR framework was in response to feedback from some borrowers who are unable to refinance their existing property loans owing to the application of the TDSR threshold of 60%.

OCBC Investment Research says it is “a positive move nonetheless”.

“We believe these fine-tunes are very well thought-out and would add a measure of stability into the balance sheets of existing borrowers,” says OCBC lead analyst Eli Lee in a Friday report.

“At the margin, this could relieve some stress on the secondary market and is overall positive for the domestic housing market and the banks’ mortgage loan books,” Lee adds.

The research house maintains its “neutral” rating on the Singapore residential property sector, and predicts home prices are likely to decline further over FY16-17.

“We continue to prefer diversified blue chips with healthy balance sheets and strong business models,” says Lee, adding that OCBC’s top picks for the sector are CapitaLand, City Developments, and Global Logistic Properties.

OCBC is keeping its “buy” recommendation for all three, with fair value estimates of S$3.68 for CapitaLand, S$9.89 for City Dev, and S$2.37 for GLP.

As at 11.45 a.m., CapitaLand is trading 2.0% higher at S$3.13, City Dev is trading 2.8% higher at S$8.82, and GLP is trading 1.4% higher at S$1.84. —

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