Debt Management Assistance Options for Singaporeans Given Rising Property Rentals and Interest Rates

46 Mr Saktiandi Supaat asked the Prime Minister in light of rising property rental rates and interest rates (a) what are the available debt management assistance options to Singaporeans, including those offered by Credit Counselling Singapore; (b) what are the current respective take-up rates of the various options; and (c) whether the Government intends to do more to encourage Singaporeans to seek such assistance and intervention, for example, by destigmatising its use.

Mr Tharman Shanmugaratnam (for the Prime Minister): The household debt situation and credit profile across consumer loan products in Singapore, fortunately, remains healthy by and large. The charge-off rate, a measure of those defaulting on credit card payments, in fact, decreased from 6.3% in the fourth quarter of 2019 to 4.1% in the first quarter of 2022. The proportion of non-performing mortgages has also remained low at less than 1%.

When borrowers face difficulties repaying their debts to financial institutions, their first step should be to approach the lenders early to explore options, such as restructuring payment arrangements. Financial institutions remain committed to provide assistance to borrowers based on their individual circumstances. Applications for assistance with regard to unsecured credit has declined over the last year, from 759 in the first quarter of 2021 to 372 in the first quarter of 2022. Applications for mortgage loan assistance declined from 1,384 to 34 over the period.

Besides such bilateral assistance, individuals with outstanding unsecured debt across more than one financial institution may also consider taking up a debt consolidation plan with a participating bank. Such plans allow borrowers to consolidate all their unsecured credit facilities across financial institutions into a single loan at a lower interest rate, simplifying the debt repayment process. Take-up rates for new debt consolidation plans have also fallen over the past year, from 1,153 arrangements in the first quarter of 2021 to 200 arrangements in the first quarter of 2022.

Borrowers who need additional assistance can seek help from Credit Counselling Singapore, or CCS. CCS provides distressed borrowers with credit counselling and helps them work out debt management plans for unsecured loans with their creditors. The plans will take into account borrowers’ payment capacity after setting aside necessary expenses and, typically, comprise smaller instalment payments over a longer repayment period at a lower interest rate. CCS conducted over 1,800 counselling sessions in 2021, with the numbers declining slightly over the last four quarters. CCS also helped place over 2,300 individuals on debt management plans and other repayment plans in 2021. This number has declined from 540 in the first quarter of 2021 to 384 in the first quarter of 2022.

A blend of early intervention and financial education can help address debt problems upstream. For instance, to encourage financially distressed HDB owners to seek assistance early, MAS has worked with MND, HDB, MOM and financial institutions to establish standardised interventions when late mortgage repayments occur, which include proactively directing borrowers to seek assistance from various sources. These include potential loan restructuring solutions, early referrals to appropriate social service agencies and, in certain limited cases, helping them source for alternative HDB accommodation where foreclosures are unavoidable.

On an ongoing basis, MoneySense, our national financial education programme, actively educates the public on money management skills and provides information on where indebted consumers can seek help.