Banks allowed to pledge HDB property loans to MAS to boost access to credit amid COVID-19 economic fallout

Financial institutions will be allowed to use their security interests in Housing and Development Board (HDB) flats as collateral for liquidity from the Monetary Authority of Singapore (MAS), as part of the Government’s plan to improve their access to funding from the central bank amid the COVID-19 crisis.

The new rule is part of the amendments to the Housing and Development Bill passed on Tuesday (Oct 6).

During the second reading of the Bill, Minister for National Development Desmond Lee said that although banks in Singapore have healthy liquidity buffers, greater access to credit will strengthen their resilience given current economic headwinds and is a “pre-emptive measure”. 

“Strong and stable banks are in a better position to support the financing needs of both individuals and businesses in Singapore,” he said, adding that the practice of accepting residential property loans as security interests for liquidity is an established practice among major central banks around the world. 

“Timely and ample liquidity provision by MAS can pre-empt and mitigate liquidity strains in banks, reducing the likelihood of spill-overs to the broader economy,” he added. 

This change will not affect HDB flat owners’ rights to their flats, nor change the terms and conditions of their housing loans, Mr Lee said. Flat owners will continue to service their housing loans with the approved financial institution over the period when the collateral is being pledged to MAS.


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