Mortgages Refinanced and Measures to Help Singapore Home Owners Facing Sudden Spike in Interest Rates
Prime Minister's OfficeSpeakers
Summary
This question concerns mortgage refinancing and government support for home owners facing rising interest rates, as raised by Mr Saktiandi Supaat. Senior Minister Tharman Shanmugaratnam stated that 27,000 home owners refinanced mortgages between March 2022 and February 2023, experiencing an average monthly payment increase of $240. He noted that 10% income growth over three years and the Monetary Authority of Singapore’s September 2022 interest rate floor adjustment helped maintain financial prudence. Borrowers facing repayment difficulties are encouraged to approach lenders or government agencies, which have implemented various measures to assist with housing loan servicing. Further assistance is detailed in references to the Minister for National Development and the Minister for Finance regarding support for those in need.
Transcript
62 Mr Saktiandi Supaat asked the Prime Minister (a) how many Singapore home owners refinanced their home mortgage loans in the past 12 months; (b) what is the average increase in monthly home mortgage payments (i) in absolute terms, (ii) as a percentage of monthly income; and (c) whether the Government is considering any measures to help Singapore home owners with the sudden spike in interest rates.
Mr Tharman Shanmugaratnam (for the Prime Minister): Close to 27,000 home owners with a mortgage from financial institutions (FIs) refinanced their mortgages in the 12 months from March 2022 to February 2023. These refinanced mortgages account for 6% of the total number of outstanding mortgage loans.
The Monetary Authority of Singapore (MAS) has estimated that the increase in mortgage payments for these borrowers was approximately $240 on average, or about 2% of their monthly income. The average monthly income of the 27,000 home owners who refinanced their loans had increased by about 10% over the last three years. This would have helped cushion the increase in their mortgage payments.
Most borrowers have been generally prudent and, hence, are able to cope with the rise in mortgage payments. MAS’ move in September 2022 to raise the interest rate used to calculate the total debt servicing ratio has also helped to encourage prudent borrowing.
MAS, however, encourages the small number of borrowers who face repayment difficulties to approach their lenders early. For Housing and Development Board home owners facing difficulties, Government agencies have implemented various measures to help them service their housing loans. The Member may wish to refer to the written answer by the Minister for National Development to a similar question posed in March this year for more details on these measures, and the recent speech by the Minister for Finance at the Debate on the President’s Address for more information on measures for Singaporeans who need support. [Please refer to "Impact of Higher Interest Rate on HDB Mortgage Rates and Loan Repayments", Official Report, 20 March 2023, Vol 95, Issue 93, Written Answers to Questions section.]