Coronavirus: MAS lets people defer home loans, insurance outlays

Individuals can apply to their banks and insurers to defer payment of property loans and premium payments for life and health insurance plan, as part of a package of measures announced by the Monetary Authority of Singapore.
Individuals can apply to their banks and insurers to defer payment of property loans and premium payments for life and health insurance plan, as part of a package of measures announced by the Monetary Authority of Singapore.PHOTO: ST FILE

SMEs also get support, such as continuing access to bank credit and insurance cover

In a bid to reduce the financial strain from Covid-19 outbreak, individuals can apply to their banks and insurers to defer payment of property loans and premium payments for life and health insurance plans.

This forms part of a package of measures announced by the Monetary Authority of Singapore (MAS) yesterday, which also offers cash-flow support to small and medium-sized enterprises (SMEs), such as ensuring continued access to bank credit and insurance cover.

People with home loans can defer either the principal payment or both principal and interest payments on their property loans until Dec 31.

Interest will accrue only on the deferred principal amount, and no interest will be charged on the deferred interest payments, the MAS said.

Housing loans make up about three-quarters of consumer lending.

Applicants do not need to show that they had been hit by the fallout from the Covid-19 outbreak, but they must not have been in debt for more than 90 days when applying for the relief.

Those with unsecured loans who have suffered a loss of a quarter or more of their monthly income after Feb 1 can apply to convert their outstanding balances into term loans at a reduced rate of interest capped at 8 per cent, far lower than the 26 per cent typically charged on credit cards.

Life and health insurance policyholders can apply to defer premium payments for up to six months while maintaining insurance coverage.

General insurance policyholders, such as for property and vehicles, may apply to their insurers for instalment payment plans too.

For SMEs, they can choose to defer principal payments on their secured term loans up to Dec 31, subject to banks' and finance companies' assessment of the quality of the SMEs' security.

They can also extend the tenure of their loans up to the corresponding period of deferment.

This option is open to SMEs that continue to pay interest and are in good standing with their banks and finance companies, MAS said, estimating that some $40 billion of loans are likely to qualify for this relief scheme.

"In the months ahead, many individuals and SMEs in Singapore will continue to face challenges in managing their cash flows and meeting their financial obligations, such as loan repayments and insurance premiums," said the MAS.

  • Easing strain of Covid-19 outbreak 

  • FOR INDIVIDUALS

    HOUSING LOANS

    Can defer either principal payment or both principal and interest payments on their residential property loans until Dec 31. Interest will accrue only on the deferred principal amount, and no interest will be charged on the deferred interest payments.

    UNSECURED LOANS

    Those who have suffered a loss of a quarter or more of their monthly income after Feb 1 can apply to convert their outstanding balances into term loans at a reduced rate of interest capped at 8 per cent.

    LIFE AND HEALTH INSURANCE

    Policyholders can apply to defer premium payments for up to six months while maintaining insurance coverage.

    GENERAL INSURANCE

    Policyholders, such as for property and vehicles, may apply to their insurers for instalment payment plans while maintaining coverage.

  • FOR SMEs

    SECURED TERM LOANS

    Defer principal payments on their secured term loans, subject to lenders' assessment of firms' collateral. They can also extend the tenure of their loans up to the corresponding period of deferment. This option is open to SMEs that continue to pay interest and are in good standing with their banks and finance companies.

But it warned that "deferring payments increases future obligations... Borrowers and policy-holders should weigh their options carefully".

The regulator worked with the Association of Banks in Singapore, the Life Insurance Association, the General Insurance Association and the Finance Houses Association of Singapore on the measures.

The MAS noted that the global outbreak is intensifying, and stringent measures are being adopted around the world to contain the virus, severely curtailing economic activity.

"Uncertainty about the trajectory of the pandemic and the depth and duration of an economic recession have also created strains in financial markets globally, which can in turn accentuate the economic crunch," the central bank said.

The Financial Times reported last month that if the virus continued to spread, fragilities in the financial system have the potential to trigger a new debt crisis as global debt continues to spiral.

MAS managing director Ravi Menon said: "These measures will complement the Government's broader fiscal initiatives and help the Singapore economy recover more quickly and emerge stronger when the pandemic passes - as it surely must."

Association of Banks in Singapore chairman Samuel Tsien said that extraordinary measures must be taken to address what has developed to become a deep, global economic crisis.

"The measures are broad-based and standardised, to provide prompt and direct relief to affected individuals and businesses, particularly SMEs," said Mr Tsien, who is group chief executive of OCBC Bank.

Applications open today for insurers, and on April 6 for banks.

A version of this article appeared in the print edition of The Straits Times on April 01, 2020, with the headline 'MAS lets people defer home loans, insurance outlays'. Print Edition | Subscribe