Assigned posts page is missing template dropdown from template attributes

Hi members,

I am trying to make a custom template for the posts (blog) page, but i have this weird problem. Whenever i assign a page to be posts page the dropdown template option is missing from the template attributes box. I have 3 existing templates and they can be assigned to any other page except the selected posts page.
Another thing i noticed is when i assign another page to be my posts page it too loses the template dropdown, until i log out and log back in. Then the previously assigned page gets the option back.
I am using a slightly modified version of the twenty fourteen theme with wordpress 4.4.

I tried switching to another theme and disabling all the plugins, still have the same problem.

Any advice on where to search?

Thanks