HOUSEHOLD DEBT SITUATION REMAINS “HEALTHY”
In response to Mr Saktiandi’s suggestions to help Singaporeans cope with rising interest rates, Senior Minister of State for Finance Chee Hong Tat acknowledged that the higher interest rates “may not be a passing phenomenon” so it is important to prepare for the change.
The Government will continue to ensure that essential areas such as public housing, healthcare and education will remain affordable and accessible to all Singaporeans, he said.
On public housing, the Government will continue to sell new flats below market value with significant housing subsidies, in order to encourage home ownership and enable as many families as possible to own homes.
Mr Chee added that the household debt situation in Singapore remains “healthy”, because of “prudent policies” on unsecured consumer lending as well as residential mortgages.
The recent property cooling measures to increase the medium-term interest rate floor used to compute the TDSR and Mortgage Servicing Ratio for property loans by financial institutes, as well as the interest rate floor for computing eligible loan amounts for HDB loans, are examples of such policies, he highlighted.
Addressing Mr Saktiandi’s point on helping borrowers better understand their loan commitments, Mr Chee said MAS currently requires financial institutions to explain how a borrower’s monthly mortgage instalments would vary if interest rates increase.
Similarly, non-financial institutions such as licensed moneylenders are required to use a language that the borrower understands to explain the terms of the loan contract and the breakdown of each repayment that goes into servicing the principal amount and other costs.
“In addition, licensed moneylenders are only permitted to impose fixed borrowing costs and fixed interest rates, ensuring that borrowers would not be caught off-guard by rising interest rates,” he said.
HELPING BUSINESSES THROUGH SCHEMES
Most businesses in Singapore are currently able to manage “debt-related risks” with sufficient liquidity holdings alongside post-COVID earnings recovery, and the Government will continue to assist them through various credit schemes, said Mr Chee.
He noted that with the expiry of the Temporary Bridging Loan Programme, businesses can still tap the Enterprise Financing Scheme, which supports access to financing for a wide range of business activities.
“Importantly, businesses would need to double down on efforts to improve productivity and upgrade the skills of their workers. This is the most effective way to improve our overall competitiveness and achieve a win-win outcome for both businesses and workers through economic growth,” he added.
For these purposes, businesses can turn to schemes like the Productivity Solutions Grant, the Energy Efficiency Grant, SkillsFuture subsidies and the newly introduced S$70 million NTUC Company Training Committee Grant.
The Government will also continue to provide Workfare Income Supplement and other support measures to boost the earnings of lower-wage workers.
But while the Government will look after individuals, households and businesses, Mr Chee highlighted the significance of “the high degree of trust in our society”.
“Trust has allowed us to weather many uncertainties together, including our fight against COVID-19, and it will be a critical success factor as we face new challenges going ahead, such as rising inflation and higher interest rates,” he said.