Landlords in Arrears of Mortgage Payments Since Start of COVID-19 Pandemic
Prime Minister's OfficeSpeakers
Summary
This question concerns the number of non-residential landlords in mortgage arrears and whether the Government will mandate banks to reduce interest rates or waive penalties for those providing rental relief. Senior Minister Tharman Shanmugaratnam responded that MAS and financial institutions implemented relief measures, such as principal repayment deferrals, resulting in a significant decrease in the number of borrowers seeking assistance. He reported that while 12,000 reliefs were granted last year, fewer than 650 applications for non-residential loan reliefs were received between January and July this year. Senior Minister Tharman Shanmugaratnam added that local banks are providing targeted restructuring solutions for landlords affected by rental waivers, who also benefit from lower floating interest rates or refinancing options. The Government assesses these existing targeted measures as sufficient for the reduced number of landlords still facing difficulties, as economic conditions normalize and most borrowers resume repayments.
Transcript
147 Mr Chong Kee Hiong asked the Prime Minister with regard to leases of non-residential properties (a) what is the number of landlords and units they own that are in arrears of mortgage payments since the start of the COVID-19 pandemic; and (b) for landlords who are legally obliged to give rental reliefs to support their tenants affected by the COVID-19 pandemic, whether the Government will consider mandating measures to compel banks to reduce their interest rates and waive penalties for late payments or interest expenses.
Mr Tharman Shanmugaratnam (for the Prime Minister): Since the start of the COVID-19 pandemic, MAS has worked with the financial industry on a comprehensive set of relief measures to support individuals and businesses. They have included full or partial deferrals of principal repayments on loans secured by property, both residential and commercial. The objective is to allow more time for economic conditions to normalise, so that we avoid unnecessary foreclosures on otherwise viable loans.
With the gradual opening up of economic activities, most borrowers have been able to resume loan repayments. Those with difficulties can apply to their banks or finance companies for relief measures. Based on the applications for assistance, the number of borrowers in difficulty has been coming down over time. Last year, banks and finance companies granted about 12,000 reliefs on non-residential property loans. Between January and July this year, they received fewer than 650 applications for payment reliefs on such loans.
We understand that some landlords may face cashflow constraints as a result of the mandated two-week rental waiver. The three local banks have recently reaffirmed their commitment to provide targeted assistance and restructuring solutions to borrowers.
Given the fall in interest rates since the start of the COVID-19 pandemic, landlords with floating rate mortgages would also have seen lower interest rates on their loans and a reduction in their debt servicing burden. Landlords with fixed rate mortgages can refinance their loans at lower interest rates and apply to lenders for waivers of refinancing fees on a case-by-case basis.
Overall, we assess the current targeted relief measures to be sufficient to support the much-reduced number of landlords who are facing difficulties.