S’pore home loan growth continues uptrend, but analysts see no sign of financial stress

SINGAPORE – Households in Singapore are taking on more loans for their properties, the latest data shows, but the increase is not raising red flags for market watchers yet.

There is no sign yet that the average family here has overstretched their finances, say the analysts.

Mortgage loans grew at a faster pace of 5.2 per cent year on year in the second quarter to $284.3 billion, according to household balance sheet numbers from the Department of Statistics (SingStat) released recently.

This followed a robust 4 per cent growth in the first quarter, also a faster pace of growth than the 3.1 per cent increase in the fourth quarter of 2024.

Home loan growth averaged 2 plus per cent growth over 2023 and the first half of 2024 before edging up to 3 per cent in the third quarter of 2024, and it has been accelerating steadily since.

Ms Lee Yen Nee, senior country risk analyst at BMI, a unit of Fitch Group, said that while mortgage loans have continued to increase in absolute terms, they have remained stable and below historical peaks as a share of personal disposable income. 

Mortgage loans as a share of personal disposable income is a measure of household financial burden. 

A higher ratio indicates potentially greater financial strain as a relatively larger proportion of a household’s take-home pay is tied to the mortgage.

In the second quarter of 2025, this metric rose to 80.3 per cent, from 79.5 per cent in the first quarter.

That is still an improvement from 2022, when the metric was in the 90 per cent to 93 per cent range; and 2023 when it was in the 83 per cent to 86 per cent range.

Home loan is the biggest debt for the typical Singapore family. 

SingStat stated on its website that mortgage loans have accounted for at least 70 per cent of household liabilities since the first quarter of 1999.

The upswing in home financing was partly behind the 6.1 per cent growth in total household liabilities to $390.9 billion in the second quarter.

This marks the seventh consecutive quarter of growth in total liabilities since the fourth quarter of 2023.

Ms Lee noted that while household liabilities are growing, household assets are appreciating as well.

As a result, the liabilities-to-assets ratio remains at “historically low levels of around 11 per cent”, she said.

This means that for every dollar of assets, 11 cents are liabilities.

Drilling down to the more liquid assets like cash and deposits, this number too continues to exceed total liabilities, noted Mr Daniel Gan, an analyst at Moody’s Ratings. 

SingStat’s household sector balance sheet data showed that liquid assets have exceeded total liabilities since the third quarter of 2006. 

Mr Gan said this indicates that “Singapore households have strong asset positions”, which provide them with “an increased level of resilience to meet their home loan payments”.

Moody’s looked at housing affordability of individuals living in private housing in an Aug 7 report.

Housing affordability is measured as the share of average monthly household disposable income that private property buyers need to meet their monthly repayments on new mortgages.

Moody’s housing affordability measure for Singapore was 24.7 per cent in June, an improvement from 27.4 per cent in December 2024, which was the worst since the ratings agency began tracking this measure in 2009.

The ratings agency said that even though affordability has improved in 2025, it is at a level where private home buyers continue to find it a strain to meet their home loan obligations.

Mr Gan noted that housing affordability for new borrowers will continue to improve for the rest of 2025, because of lower interest rates and slowing housing price gains.

On the broader macroeconomic front, household debt as a percentage of gross domestic product (GDP) shows how much a country’s households owe relative to the size of its economy. 

A ratio above 50 per cent means households’ borrowings are more than half of a country’s economic output. 

In Singapore’s case, Maybank Kim Eng estimated that households here have accumulated debt equivalent to about 53 per cent of GDP in the second quarter of 2025.

Dr Chua Hak Bin, its senior economist, said the metric is down from a high of over 75 per cent in 2014, as a result of prudential property measures put in place by the Monetary Authority of Singapore.

Some of the measures include:

For now, the economic picture remains positive. The Government has upgraded its growth forecast for 2025 to between 1.5 per cent and 2.5 per cent after the economy grew a better-than-expected 4.3 per cent in the first half of 2025. 

BMI is expecting full-year growth of 2.5 per cent, which is at the top end of the official forecast.

Ms Lee said the growth should continue to support the average household’s ability to service its debt.

The research firm expects growth to slow to 1.2 per cent in 2026.

Ms Lee said she does not expect widespread retrenchments that would materially impact debt-servicing capacity.

Falling interest rates will also ease some burden on households, she added.

Professor of finance and real estate at the NUS Business School Qian Wenlan is staying cautious.

She noted that home buyers and consumers contemplating big-ticket purchases should keep in mind that the economic impact of US President Donald Trump’s tariffs is still uncertain.

She added that there is no clarity on the extent of tariffs he will impose on semiconductor and pharmaceutical imports as well.

These are some of the risks weighing on Singapore’s economic outlook, Prof Qian said.