Most Singapore households able to continue servicing mortgages amid rising interest rates
Most Singapore households able to continue servicing mortgages amid rising interest rates. Despite rising interest rates, most Singaporeans would be able to service their home mortgages, ministers said Parliament on Thursday (Oct 10).
Stress tests done by the Monetary Authority of Singapore (MAS), according to Alvin Tan, Minister of State for Trade and Industry, show that most homeowners are able to pay their home loans, although “a comparatively small fraction may be more limited.” These stress tests, he claims, rated debt repayment ability based on income while neglecting financial buffers such as savings. Additional interest rate hikes and huge revenue losses were attempted, “even with a 400 basis point increase and a 10% decrease in income.”
Tan was replying to queries about the number of homeowners with private financial institution loans who will be affected by interest rate increases, as well as the risk and extent of foreclosures in the short to medium term. One in every three homeowners with outstanding mortgages from financial institutions (FIs) is on interest-rate-variable mortgage packages as of the second quarter of 2022. “These borrowers’ mortgage payments have already increased in recent months,” Tan said. The loans of the remaining borrowers are fixed or fixed for a predetermined period of time, or they reflect market rates with a lag.
Tan stated, “The proportion of non-performing mortgages among FI loans is relatively low, at 0.3%.” In reality, the number of foreclosures has been decreasing since 2021 and has remained low this year, with less than 30 units altogether. The MAS does not expect widespread foreclosures in the near to medium term. ” Approximately 80% of public housing flat owners with FI loans are on mortgage packages that track market interest rates with some lag. The remaining 20% have market interest rate schemes.
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