Most over-stretched borrowers affluent, unlikely to default: MAS
Singaporean households are overall in good financial shape and even those who may have over-stretched themselves are unlikely to default on their loans even when interest rates rise.
Mr Lawrence Wong, a director on the board of the Monetary Authority of Singapore, reiterated in Parliament on Monday that only 5 to 10 per cent of property loan borrowers here are servicing debts amounting to over 60 per cent of their monthly incomes.
Housing loans constitute the bulk of their debt, he said.
"But it doesn't mean they will automatically default on their loans. Most of these borrowers have above-average income levels. The majority took up private housing loans and are only servicing one housing loan, so they are likely to have a larger absolute buffer in income and assets."
Mr Wong was speaking on behalf of MAS chairman and Deputy Prime Minister Tharman Shanmugaratnam, in response to a question raised by Nominated MP Laurence Lien.
Mr Wong added that household balance sheets are on the whole in good shape, with the household debt to income ratio falling in the second half of the last decade.
The debt-to-income ratio of 2.1 times last year was still "significantly lower" than the 2.6 times seen in the middle of the last decade, he added, which means that Singaporean households "are not more leveraged than they have been in the last decade".