Singapore households remain financially healthy despite rising inflation: Dept of Statistics data

Household liabilities grew 5 per cent year-on-year in the second quarter, down from 6 per cent growth in the first quarter. ST PHOTO: ARIFFIN JAMAR

SINGAPORE - The financial position of Singapore households has remained healthy in the second quarter of this year despite rising inflation and recession concerns, data from the Department of Statistics released on Tuesday (Aug 30) showed.

Household liabilities grew 5 per cent year on year in the second quarter, down from 6 per cent growth in the first quarter, due to a lower take-up of mortgages and personal loans.

For the second quarter, household liabilities totalled $363.8 billion, with mortgage loans making up 71.5 per cent of total liabilities and personal loans taking up the remaining 28.5 per cent of total liabilities.

Economists look at such data to gauge whether households have borrowed too much, especially as headwinds from rising rates and a global recession loom.

For now, Mr Song Seng Wun, economist from CIMB Private Banking, said most households will be able to weather a potential downturn in the economy.

Mr Song said policymakers have been pre-emptive in ensuring households do not overextend themselves during the years that borrowing costs are cheap.

For example, from December last year, a home buyer could borrow only up to the amount where his total monthly debt repayments is 55 per cent of his gross monthly income.

Senior Minister and Coordinating Minister for Social Policies Tharman Shanmugaratnam said in a reply to a parliamentary question in August that the median total debt servicing ratio was 43 per cent for new mortgages over the past year.

This means households' total monthly debt repayments make up 43 per cent of gross monthly income, below the threshold of 55 per cent.

While Singapore households also continue to have more assets than debt in aggregate, asset growth slowed from 6.9 per cent year on year in the first quarter to 4 per cent in the second quarter.

For the second quarter, financial assets, which include deposits, shares, life insurance and funds from the Central Provident Fund, made up 56.6 per cent of total household assets.

Residential property assets made up the remaining 43.4 per cent.

Total household net worth, which is defined as assets minus liabilities, was $2.46 trillion in the second quarter, growing by 7.7 per cent from the same period a year ago.

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