Home loans growth slowed but some households still vulnerable: MAS

Singapore’s household net wealth has grown over the past 10 years and now stands at about four times GDP as at the third quarter this year.

But the Monetary Authority of Singapore (MAS) warns that some over-leveraged households may be vulnerable when interest rates increase.

In its annual financial stability review report, the central bank says household debt has gone up over the years, with mortgage loans making up nearly three quarters of household debt.

Some families could also have overextended themselves in other ways, such as taking on bigger car loans and unsecured credit.

Still, MAS says its various measures to encourage financial prudence have taken effect.

In particular, the growth in home loans slowed to 12 per cent in September this year, down from a peak of 22 per cent growth in September 2010.

A total of S$8.8 billion in new home loans was given out in the third quarter of this year, less than the S$13.5 billion the preceding year.

Ivan Tan, Director of Financial Institutions Ratings at Standard & Poor’s, said: “The series of cooling measures, especially with the debt servicing ratio, has been effective to date. It has led to a moderation in terms of housing loans growth and also a moderation of property prices. So we believe that the government stands ready to implement more cooling measures until their price stabilisation objectives have been met.”

Source : Channel NewsAsia – 3 Dec 2013

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