Singapore’s Housing and Development Board (HDB) now allows flat buyers to take out loans but still keep up to SGD20,000 (USD14,600) in their Central Provident Fund (CPF) Ordinary Accounts.
Market observers believe the new measure will offer relief to Singaporean couples and individuals who are financially strained at meeting their mortgage obligations while starting a family or waiting in between jobs.
Borrowers had been known to expend the entire balance of their CPF Ordinary Account, used for social security savings, to pay for a flat purchase prior to the implementation of the measure.
“The option to retain some balance in their CPF OA will provide flat buyers with greater flexibility in using their CPF funds,” the HDB said in a statement accompanying the announcement.
“The funds can be used for their monthly mortgage instalments in times of need and will improve retirement adequacy if left unutilised. Flat buyers who wish to use all their CPF OA balances for their flat purchase may continue to do so.”
The option to retain such amount is offered to flat buyers yet to collect the keys to their new flats as well as resale applicants from this week onward.
The sum should be adequate to sustain a couple through incremental loan payments for six months to a year, according to Chris Koh, director of real estate firm Chris Koh International.
"In circumstances where people lose their jobs (and) get retrenched, they will panic if they don't have the CPF (monies) to pay their instalments," Koh told TODAYOnline. "At least tomorrow when I get retrenched I won't panic.”