SINGAPORE: With many borrowers expected to continue to face financial issues amid a prolonged COVID-19 pandemic, the Monetary Authority of Singapore (MAS) is extending its support measures for various groups of borrowers, including allowing those with property loans to apply to temporarily reduce their monthly instalment payments.
Those with renovation and student loans may also opt for a longer repayment period, while small- and medium-sized enterprises (SMEs) will get to partially defer principal payments for some loans and receive customised restructuring options.
These were announced by the MAS on Monday (Oct 5) as the clock ticks down to the end of the relief measures on Dec 31 this year.
Since April, companies and individuals hurt by the pandemic have been able to request to defer repayments for various bank loans until the end of 2020. To minimise a “cliff effect” once the measures expired, the MAS said in July that it was talking to banks and financial companies about how to ease borrowers into gradually resuming repayments.
READ: MAS in talks with banks on easing borrowers back into repayments when COVID-19 relief measures end
The MAS, in its media release on Monday, urged borrowers who are able to resume loan repayments in full to start doing so from January so as to avoid increasing their overall debt.
It acknowledged, however, that many individuals and businesses are likely to continue to experience cash flow pressures into early next year.
The extended support will give those who are currently under loan repayment deferrals more time to resume repayments. The support measures will also be available to those who have not tapped on any deferral plan previously but are now facing financial stresses.
MAS managing director Ravi Menon said: “We want to continue providing relief to borrowers facing cash flow challenges while encouraging them to resume loan repayments to the extent they are able to so that they do not accumulate too much debt.
“A good outcome is one where individuals and SMEs are able to use the support measures to help them tide through the current economic difficulties and emerge with a sustainable debt burden as the economy recovers.”
INDIVIDUAL PROPERTY LOANS
Those with residential, commercial and industrial property loans may apply to temporarily reduce their loan repayments to 60 per cent of their monthly instalments.
The reduced monthly instalments will cover interest and partial principal payments for most individuals, the MAS said, allowing them to pay down their principal amounts while easing cash flow.
Individuals will have to prove that their incomes have been impacted by at least 25 per cent and they are not in arrears for more than 90 days on their property loan payments, regardless of whether they have taken up payment reliefs previously.
Those who meet the criteria can apply for the assistance between Nov 9 this year and Jun 30 next year. Instalments plans may be temporarily reduced for up to nine months, but not exceeding Dec 31, 2021.
Should borrowers require more help after the reduced instalment plan ends, a loan tenure extension of up to a cumulative three years can be discussed with banks on a “case-by-case basis”, said MAS. Individuals should approach their banks to find out about the tenure extension on offer.
Those who are unable to service the reduced payments under the extended relief should also approach their lenders early to discuss alternative repayment options, it added.
INDIVIDUAL STUDENT, RENOVATION LOANS
Individuals who are servicing renovation and student loans can apply to extend their loan tenures by up to three years, so as to lower their monthly repayments.
This option is available to those who can prove an income impact and whose loan payments are not more than 90 days past due, regardless of whether they have taken up payment reliefs previously. The application window for this is also between Nov 9 this year and Jun 30 next year.
MAS advised individuals to discuss alternative repayment options with their lenders early, if they are unable to service the reduced payments under this programme.
For example, borrowers can discuss taking up loan repayment plans with lower monthly instalments or payment moratoriums with their banks on an exceptional basis, it said.
PERSONAL UNSECURED CREDIT, DEBT CONSOLIDATION PLAN
For those with difficulties repaying their unsecured revolving credit facilities, they may apply to convert their outstanding balances to term loans at lower interest rates.
Those on debt consolidation plans can apply to extend the loan tenure of their plans for up to 5 years.
For both, individuals have until Jun 30, 2021, to do so if they can show that their incomes have been impacted and have repayments that are between 30 and 90 days past due.
MAS said those who continue to face difficulty in repayments despite taking up these reliefs can reach out to their lenders or the Credit Counselling Singapore to discuss restructuring plans.
SME LOAN AND RESTRUCTURING
Two support schemes will be available for SMEs who need extra relief.
The first is the Extended Support Scheme - Standardised (ESS-S), where SMEs may apply to defer 80 per cent of principal payments on their secured loans from banks or finance companies, as well as loans granted under the Enterprise Singapore’s Enhanced Working Capital Loan Scheme and Temporary Bridging Loan Programme for a certain period.
The period of deferment will be determined by their sectors, as categorised under the Jobs Support Scheme.
For sectors defined as tier 1 and tier 2, which include the hard-hit aviation and aerospace, as well as tourism industries, they can choose to have the partial deferment of the principal from Jan 1 to Jun 30, 2021.
SMEs in other sectors may opt to do the same from Jan 1 to Mar 31, 2021.
MAS said this relief will be available to all SMEs that are “in good standing” with their banks and finance companies, defined as not having arrears on all loan payments for more than 30 days. Those whose loans have been granted principal moratorium should also not have overdue interest payments for those loans.
Banks and finance companies are also developing an Extended Support Scheme - Customised (ESS-C) to help SME borrowers restructure their loans across multiple financial institutions. MAS said more details will be provided in the coming weeks.
The new scheme will complement other restructuring assistance schemes, such as the new Simplified Insolvency Programme (SIP) for micro and small companies that is being proposed by the Ministry of Law and the Credit Counselling Singapore’s scheme for sole proprietors and partnerships.
Borrowers can apply for both the ESS-S and ESS-C from Nov 2.
As of end-August, banks have approved about 36,000 applications to defer payment of property loans until the end of this year. The notional amount of loans deferred is about S$29 billion, said MAS.
The number of mortgage deferments has eased in the last few months, said MAS, noting how there were nearly 34,000 approved mortgage relief applications at end-June.
“Broadly, the number of mortgage deferments has tapered off, since the peak in April to June 2020 when more individuals were affected by the circuit breaker measures,” said an MAS spokesperson in response to media queries.
There were also more than 8,100 applications from individual borrowers wanting to convert their outstanding unsecured loan balances into new loans with lower interest rates. The notional amount of loans outstanding is more than S$200 million, MAS said in a data fact sheet outlining the scale of its reliefs so far.
Meanwhile, there were also more than 5,400 applications from SMEs to defer principal payments on secured loans. The total notional amount of loans deferred came up to more than S$11.5 billion.
Separately, OCBC said it has approved more than 8,000 deferments for mortgage, car and renovation loan repayments since April. This totaled up to more than S$5 billion in loans.
It has also granted moratorium for more than 2,000 applications for unsecured loans worth over S$40 million over the same period.
Mr Joseph Wong, the bank’s head of consumer credit risk management, said further relief support measures are meant to “help ease customers back into some form of normalcy”.
“We encourage customers who had taken on moratoriums but are now able to re-start the repayments to do so as soon as possible. This will help relieve them of future financial strain,” he said, adding that customers who require help reach out to discuss alternative solutions.
OCBC did not provide a breakdown for SMEs but noted that requests for new loans and moratoriums have slowed since the peak in the second quarter.
Requests have slowed as more SMEs see cash flow improvement from the resumption of business and the added support from various relief measures, said its head of global commercial banking Linus Goh.
SMEs in hard-hit industries, such as the travel-related sector and construction, will benefit from the additional reliefs, but OCBC does not see a significant proportion of its customers requesting for a moratorium extension.
“We continue to be actively engaged with our SME customers, working with them to understand the evolving post-COVID business environment and to support them as they adapt to the new norms,” said Mr Goh.
DBS said it has approved about 9,000 home loan payment relief applications amounting to S$5.2 billion so far, as well as close to 300 renovation loan payment applications.
It also partnered the Government and industry associations to provide critical working capital support to SMEs throughout the pandemic.
Since March, it has approved close to 9,700 loans totalling more than S$5 billion to SMEs through the Temporary Bridging Loan and Enhanced Working Capital Loan. Of which, more than 8,300 loans were for micro and small businesses.
“We made special effort to reach out to micro and small enterprises, as these are typically the most underserved and vulnerable of businesses in an economic crisis,” said DBS Singapore country head Shee Tse Koon.
To provide SMEs with further liquidity support, DBS said it has granted more than 3,300 loan moratoria on close to S$4.5 billion in secured SME loans to date.
UOB said it remains committed to helping customers through to better times and is "fully supportive" of the extension of relief measures.
It has received more than 8,000 applications to defer mortgage repayments and more than 4,000 applications for unsecured credit thus far. A majority of them were approved, said UOB's head of group personal financial services Jacquelyn Tan.
"While there was a spike in calls during the early days of the (relief programme), we have seen a drop of more than 50 per cent in new loan deferral applications in the last two months," she added.
"As the pandemic continues to affect lives and livelihoods, we encourage our customers to speak to us early if they are experiencing financial difficulties."