SINGAPORE - The Monetary Authority of Singapore (MAS) has put in place a number of prudential limits on borrowing by individuals and households so that they do not borrow beyond their means.
The limits are generally more extensive and stringent than in many countries, Senior Minister and MAS chairman Tharman Shanmugaratnam said on Tuesday (Sept 14).
In a written answer to a parliamentary question filed by Ms Foo Mee Har (West Coast GRC), Mr Tharman, who was replying for the Prime Minister, said: "For now, there are no worrying signs of rising indebtedness amongst young adults."
"Average monthly default rates amongst borrowers below 30 years of age have remained low at less than 0.7 per cent from March 2020 to March 2021. The number of young adults with credit card rollover balances dropped by 23 per cent from March 2020 to March 2021. Their average rollover balances also fell by 15 per cent year-on-year."
Ms Foo had asked whether the increase in personal debt amongst young adults below 30 years old in the past year is sustainable and what preventive measures can be put in place to avoid youth indebtedness from taking root in Singapore.
Mr Tharman replied: "Unsecured borrowing by an individual is subject to the individual meeting minimum income requirements, and the total amount of such borrowing is capped at his or her annual income. Mortgages, which constitute the largest liability for households, are subject to both a loan-to-value limit and a total debt servicing limit."
The number of young adults with unsecured personal loans fell by 33 per cent from March last year to March this year, and the average level of such loan balances fell by 21 per cent, said Mr Tharman.
Mr Tharman also said that the average outstanding balances of mortgages by young adult borrowers fell by 12 per cent over the same period.
"Whilst the average balances for secured personal loans, excluding mortgage loans, increased by 4 per cent in the same period, these were typically offered by private banks to high-net-worth individuals," said Mr Tharman.
"Young adults with secured personal loans make up less than 1 per cent of the young adult population."
This comes after The Straits Times reported last week that personal debt among young adults here has been rising amid the Covid-19 pandemic.
Credit Bureau Singapore (CBS) data showed that while credit card borrowing showed no significant variation, people in their 20s have been taking on increasing amounts of other debt since the second quarter of last year.
Latest figures showed that the amount of debt taken on by borrowers in their 20s shot up by 19 per cent in the second quarter of this year compared with the first quarter.
This has been increasingly made up of secured personal loans, even as unsecured personal loan balances fell.
A CBS spokesman told ST that secured personal loans were up by 11.27 per cent in the second quarter, while unsecured personal loans fell by 6.49 per cent.