Mortgage defaults halved in two years

The percentage of mortgagors falling behind in their repayments in Singapore has halved over the last two years.

Releasing the data on Monday, DP Credit Bureau (DPCB) said the average default rate fell to 0.43 per cent in March this year compared to 0.89 per cent in March 2008.

This means that in 2008 one in every 112 mortgagors was in default on their repayments, and this figure dropped to just one in every 233.

Nearly half (49.7%) of all mortgage defaults took place between the third and the fifth year of the loan.

Mr Lincoln Teo, general manager of DPCB, said there were several factors which explain why borrowers are being more diligent in their loan repayments.

He cited an overall improvement in the property market and sentiment which indirectly drives better payment behaviour from mortgagors. There is also greater consumer awareness on the maintenance of one’s credit worthiness and how important that is for securing credit.

Traditionally, the 21-29 year-olds have had the highest percentage of defaults on their mortgages.

But now, the 50-59 age group has taken over, with 0.6 per cent falling behind in their payments.

Explaining, Mr Teo said when people in this age group lose their jobs, they may find it harder to find another, which puts great pressure on their ability to continue servicing their mortgages.

The 40-49 age group has the most mortgagors, accounting for 37 per cent of all loans.

Source : Channel NewsAsia – 23 Aug 2010

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