29 November 2021
On 18 November 2021, the Monetary Authority of Singapore (“MAS”) issued a consultation paper seeking feedback on proposed amendments to the notices on the residential property loans fact sheet. The proposed amendments are primarily aimed at enhancing disclosures by financial institutions (“FIs”) and facilitating the process for digital acknowledgement. The consultation closes on 14 January 2022.
Enhancing disclosures in Fact Sheet
MAS’ recent thematic inspections, the findings of which were published on 18 November 2021 in an information paper titled “Residential Mortgage Pricing and Disclosure Practices - Observations and Supervisory Expectations from Thematic Inspections” (“Information Paper”), found that banks should improve the disclosure of key information relating to interest rate changes.
MAS therefore is proposing amendments to MAS Notices 632A, 1106A, 825A and 115A (collectively, “Fact Sheet” or “FS Notices”) to require enhanced disclosure of:
- components of the interest rate of the loan (e.g. floor rate) in addition to the type of reference rate and spread, and circumstances under which these components may be changed; and
- alternative arrangements that FIs may provide for in the event that FIs make changes to the components of the interest rate of the loan:
- in circumstances that were not disclosed in the Fact Sheet; or
- in exercise of their right of review clause in the loan contract.
MAS is proposing for FIs to make these disclosures so that borrowers can make informed decisions, and have clarity as to alternative arrangements they will have should FIs make unexpected interest rate changes after they have committed to a property loan.
MAS will also make administrative amendments to the Fact Sheet to include loan packages based on the Singapore Overnight Rate Average which FIs have started to offer.
Facilitating digital acknowledgment of Fact Sheet
MAS is also proposing amendments to the FS Notices to facilitate the process for FIs to obtain acknowledgments from borrowers on the Fact Sheet digitally (e.g. through electronic signatures) or from an authorised joint-borrower on behalf of other borrowers.
Residential Mortgage Pricing and Disclosure Practices - Observations and Supervisory Expectations from Thematic Inspections
MAS conducted thematic inspections on the residential mortgage pricing and disclosure practices of large mortgage lenders over 2020 and early 2021. The Information Paper highlights good practices observed from the inspections, and sets out MAS’ supervisory expectations in the areas of (i) transparency, (ii) consideration of customer’s interests, and (iii) accountability and product governance over the mortgage lending business.
The following materials are available on the MAS website www.mas.gov.sg: