Singapore’s household debt drops to lowest in a decade
Aggregate household debt in Singapore fell for the eight consecutive quarter to 1.2 times personal disposable income in the third quarter of 2023, the lowest level in over a decade, the Monetary Authority of Singapore (MAS) said in its Financial Stability Review for this year.
Singapore (VNA) – Aggregate household debt in Singapore fell for
the eight consecutive quarter to 1.2 times personal disposable income in the
third quarter of 2023, the lowest level in over a decade, the Monetary
Authority of Singapore (MAS) said in its Financial Stability Review for this
year.
MAS said households have exercised caution in taking on additional loans due to the increase in interest rates since the second half of 2022, resulting in a decline in the amount of money they owe from a year ago. Interest rates in the country rose to more than 3.5% in the second half of 2023, from less than 0.5% in the first half of 2022.
Besides, income growth and financial buffers in the form of extra savings also cushioned rising debt servicing costs for households, and helped keep non-performing loan rate and leverage risks low.
MAS also said that household sector net wealth rose by an annual 7.6% to 2.7 trillion SGD (over 2 billion USD) in the third quarter of 2023, largely supported by sustained growth in liquid assets, including cash on hand or in bank deposits, and in the value of residential property assets.
The biggest drop has been in personal loans, which represent about a quarter of the aggregate household debt. Meanwhile, housing loans, making up about three-quarters of the aggregate household debt, grew at a subdued annual pace of about 1% in the third quarter as some existing borrowers paid down their mortgages.
The central bank warned that borrower should continue to exercise caution as interest rates are likely to remain high. The advice comes as nominal wage gains are expected to moderate amid slower growth and global macroeconomic uncertainties in the quarters ahead./.
MAS said households have exercised caution in taking on additional loans due to the increase in interest rates since the second half of 2022, resulting in a decline in the amount of money they owe from a year ago. Interest rates in the country rose to more than 3.5% in the second half of 2023, from less than 0.5% in the first half of 2022.
Besides, income growth and financial buffers in the form of extra savings also cushioned rising debt servicing costs for households, and helped keep non-performing loan rate and leverage risks low.
MAS also said that household sector net wealth rose by an annual 7.6% to 2.7 trillion SGD (over 2 billion USD) in the third quarter of 2023, largely supported by sustained growth in liquid assets, including cash on hand or in bank deposits, and in the value of residential property assets.
The biggest drop has been in personal loans, which represent about a quarter of the aggregate household debt. Meanwhile, housing loans, making up about three-quarters of the aggregate household debt, grew at a subdued annual pace of about 1% in the third quarter as some existing borrowers paid down their mortgages.
The central bank warned that borrower should continue to exercise caution as interest rates are likely to remain high. The advice comes as nominal wage gains are expected to moderate amid slower growth and global macroeconomic uncertainties in the quarters ahead./.
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