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SINGAPORE : As economic growth heads south, debts are going up.
And the combination “will push many individuals into financial difficulties as jobs and income become affected”, Credit Counselling Singapore (CCS) said on Thursday.
Preliminary statistics in August from the Monetary Authority of Singapore show that total debt to individuals stand at S$112 billion - almost 10 per cent up over a period of 12 months.
In particular, credit card rollover debt has ballooned to S$3.3 billion, an increase of S$296 million over the 12 months against a S$94-million increase for the previous 12 months. Housing loans are also up S$6.6 billion.
“Singaporeans have been piling on debt at a fast rate,” said CCS president Kuo How Nam, who cited the statistics in a letter to the media.
There was also a S$2.5-billion (18.4-percent) jump under “other loans” (facilities given for unspecified purposes) to individuals, taking the total amount to almost S$16 billion. The previous year’s increase was only S$584 million for this category.
Mr Kuo urged consumers to “urgently examine and make every effort to reduce or restructure” their debts, especially credit cards and credit lines, which are expensive and recallable.
With the credit crunch in the United States and Europe, banks here appear to have also tightened consumer lending, with some housing loan applicants reporting being subjected to more stringent criteria.
A 32-year-old teacher, for one, told TODAY that her loan application was rejected at a local bank – even though she took home more in income this year than the year before.
She declined to be named, as she is still trying to get a housing loan. Apparently, her switch from a permanent full-time job to a freelance one may be the reason.
Banks say they generally do not reveal their specific guidelines for credit assessment due to reasons of “market sensitivity”.
A UOB spokeswoman told TODAY: “UOB has always taken a prudent approach in its consumer credit assessment process regardless of market conditions.
“Generally, a credit application assessment is based on information including the borrower’s employment, income and credit records. This enables the bank to evaluate the borrower’s ability to service the credit facility.”
Mr Kuo urged creditors to exclude tactics of “harassment and intimidation” when attempting to recover the debt.
“For example, phone calls during working and unreasonable hours should be curtailed,” he said.
“Writs of seizure and sale which are costly and usually realise very little proceeds should be stopped. Lawyers should not write to employers stating that they are acting on behalf of an unnamed financial institution and asking for verification of employment and other details as this will trigger inquiries by employers which can often affect the job and career of the staff concerned.”
He suggested a code of conduct for debt collectors to be drawn up and called on the Government to speed up the implementation of a debt repayment scheme proposed last year to give wage earners an alternative to bankruptcy. - TODAY/il
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