Alvin Tan on borrowing prudently for housing amid rise in interest rates

Households with outstanding mortgages will see higher borrowing costs as market interest rates rise from the exceptionally low levels of the past decade, but they will face the impact of the rise at different points of time, says Minister of State for Trade and Industry and Monetary Authority of Singapore (MAS) board member Alvin Tan. Speaking in reply to an MP's questions in Parliament on Thursday (Oct 20), he said as rates continue or could continue to remain high beyond the next two to three years, all households will face higher borrowing costs. They should exercise prudence in their new borrowings. On the whole, the household debt situation in Singapore remains generally healthy, he said. The proportion of non-performing mortgages among financial institution loans is low at 0.3 per cent, while the number of foreclosures has trended down since 2021 and remained low at fewer than 30 units so far this year. Mr Tan said MAS does not expect widespread foreclosures in the near- to medium-term. He said the situation reflects in part the measures put in place over the years to limit the amount one can borrow to buy property. Mr Tan said stress tests by MAS suggest that most households should still be able to service their mortgages under scenarios of further interest rate hikes and significant income losses. A relatively small proportion of highly leveraged households may be more constrained under the stress scenarios, he added. *Audio issues inherent from source