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 can continue to service their mortgages for their homes, ministers told Parliament on Thursday (Oct 10).
According to Alvin Tan, Minister of State for Trade and Industry, stress tests conducted by the Monetary Authority of Singapore (MAS) demonstrate that most homeowners are able to pay their home loans, while “a comparatively small proportion may be more constrained.” According to him, these stress tests assessed debt repayment ability based on income while ignoring financial buffers such as savings. Additional interest rate increases and significant revenue losses were tried, “even with a 400 basis point rise and a 10% drop in income.”
Tan was responding to questions on the number of homeowners with private financial institution loans affected by interest rate rises, as well as the danger and scope of foreclosures in the near- to medium-term. As of the second quarter of 2022, one in every three homeowners with outstanding mortgages from financial institutions (FIs) is on interest-rate-variable mortgage packages. “Mortgage payments for these borrowers have already increased in recent months,” Tan said. The remaining borrowers’ loans are fixed, or fixed for a set period of time, or reflect market rates with a lag.
“The proportion of non-performing mortgages among FI loans is very low, at 0.3%,” Tan pointed out. In truth, the number of foreclosures has been dropping since 2021 and has stayed low this year, totaling less than 30 units. MAS does not anticipate widespread foreclosures in the near to medium future. ” Approximately 80% of public housing flat owners with FI loans are on mortgage packages that, with some lag, follow market interest rates.
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