Parliament: Banks approve 90% of applications to defer mortgage payments amid Covid-19

Banks have approved more than 90 per cent of applications submitted by small and medium-sized enterprises to defer payments on secured loans.
Banks have approved more than 90 per cent of applications submitted by small and medium-sized enterprises to defer payments on secured loans.ST PHOTO: CHONG JUN LIANG

SINGAPORE - Banks have approved about nine in 10 applications by property buyers to defer the payment of their mortgages.

They have also approved more than 90 per cent of applications submitted by small and medium-sized enterprises (SMEs) to defer payments on secured loans.

These deferments are part of baseline relief measures the Monetary Authority of Singapore (MAS) had introduced to help residents and companies hit by the economic fallout from Covid-19.

MAS board member Ong Ye Kung, in announcing the figures in Parliament on Tuesday (May 26), said the central bank "has been working with the financial industry to help individuals and SMEs with a wide range of credit relief measures, without these impacting the borrower's credit record".

In total, there were 31,300 such applications from property buyers and 3,300 applications from SMEs as of May 10, he added.

"Our priority has been to prevent borrowers from encountering repayment difficulties," said Mr Ong, who is also the Education Minister.

MAS has also worked with financial institutions and industry associations to promote awareness of the relief measures, and to help borrowers understand the costs and benefits of each relief measure so that they can make informed decisions, he added.

Mr Ong was responding to Mr Henry Kwek (Nee Soon GRC), who had asked whether MAS will consider proactive measures to help individuals and businesses understand credit restructuring and provide credit counselling programmes as many will face financial woes because of the coronovirus pandemic.

Mr Kwek also wanted to know if the central bank will proactively monitor the banks' housing loan rates to ensure reductions are timely and fair, given that interest rates are declining rapidly.

 
 

Mr Ong said MAS does not intervene directly in housing loan pricing as interest rates are determined by the market. He was responding on behalf of Senior Minister Tharman Shanmugaratnam, who is the minister in charge of the central bank. Mr Ong added: "But (the central bank) expects housing loan interest rates to be revised downwards in a fair manner, where this is consistent with sustained trends in banks' cost of funding for such loans." 

He pointed out that the current rates for new housing loans are between 1.4 per cent and 1.8 per cent for the first year, which are lower than the range of 1.8 per cent to 2.3 per cent last year.

"However, as a matter of practice, banks will charge a fee to borrowers wishing to refinance their housing loans when they are still within the lock-in period," Mr Ong said.

"If there are borrowers who have difficulty paying the fee, they can put up an appeal, and I am sure the banks will consider on a case-by-case basis," he added.

He also noted that there will be borrowers who will find the relief measures insufficient.

 
 

"They will have to approach their banks to explore possible solutions, including restructuring their debts. 

"They may also approach the Credit Counselling Singapore... for debt management advice and counselling," Mr Ong added.