Median Debt-to-income Ratio of Singaporeans Compared to Those Living in Top 10 Global Cities
Prime Minister's OfficeSpeakers
Summary
This question concerns a request by Mr Shawn Huang Wei Zhong for a comparative table of the median debt-to-income (DTI) ratio of Singaporeans against citizens in the top ten global cities by GDP. Senior Minister Tharman Shanmugaratnam stated that Singapore’s household DTI averaged 1.3 from 2018 to 2020, the lowest among top advanced economies except the United States. He noted that Singapore’s net assets-to-income ratio of 7.9 is the highest among these peers, with mortgage loans comprising 70% of debt at a loan-to-value ratio under 50%. Senior Minister Tharman Shanmugaratnam confirmed that the median Total Debt Servicing Ratio for new mortgages is 43% and overall household debt servicing ability remains sound. He concluded by advising highly leveraged households to approach lenders early to explore potential refinancing and repayment solutions if they face difficulties.
Transcript
1 Mr Shawn Huang Wei Zhong asked the Prime Minister whether the Government is able to provide a comparative table of median debt-to-income ratio of Singaporeans and citizens living in the top 10 cities ranked by gross domestic product for the past three years.
Mr Tharman Shanmugaratnam (for the Prime Minister): The debt-to-income ratio (DTI) of the household sector in Singapore averaged at 1.3 for the period of 2018 to 2020. Compared with the top 10 advanced economies by Gross Domestic Product (GDP) per capita1, Singapore's household DTI, with the exception of the United States, is the lowest (Table 1).
More importantly, DTIs have to be viewed in context of a household's assets. Households in Singapore have assets significantly larger than their debts on aggregate. Looking at assets net of liabilities, the net assets-to-income ratio in Singapore of 7.9 on average for the period of 2018 to 2020 is the highest among the same economies (Table 2).
With home ownership rates in Singapore close to 90%, about 70% of the debt on household sector balance sheets comprises mortgage loans. These loans have an average loan-to-value ratio of less than 50%, indicating that households generally have significant net positive equity in their residential properties.
Singaporean households' ability to meet their immediate debt repayment obligations is healthy, with deposits growing faster than total household debt. Their overall debt servicing ability is also sound, with the median Total Debt Servicing Ratio (TDSR)2 at 43% for new mortgages issued over the past year.
That said, there will be a small segment of households who are more highly leveraged and could face difficulties in servicing their debt. Such borrowers should approach their lenders early to explore possible loan refinancing and repayment solutions.
