The Monetary Authority of Singapore (MAS) is working closely with banks and financial institutions on how to ease individuals and businesses who have tapped on existing COVID-19 relief measures into gradually resuming repayments.
"We wish to avoid cliff effects of a sudden withdrawal of these reliefs. It can’t be that past midnight of 31 December 2020, all the reliefs stop and then borrowers have to start making repayments on 1 January 2021. That will be too sudden and they may not be prepared.”, said MAS managing director Ravi Menon on Thursday (16 July).
Singapore central bank aims to announce more details by October so that borrowers have sufficient time to adjust.
The MAS rolled out various measures early this year to help individuals whom encountered financial pressure amid the coronavirus pandemic.
These include allowing individuals to apply to defer their repayments for residential property loans, student loans, renovation loans and car loans until the end of the year.
These relief measures have helped ease the financial stress of individuals and businesses, said Mr Menon, but deferred repayments only provide “temporary relief”.
“Bank loans and insurance policy premiums will eventually have to be paid,” he said.
MAS chief acknowledged that deferment incurs interest cost, which means larger outstanding balances at the end of the deferment period. The longer the deferment, the more at risk some of these borrowers will be in terms of repayments.
To date, local and foreign banks in Singapore have approved the deferment of principal or interest payments, or both, for nearly 34,000 mortgage loans until 31 December 2020.
They have also deferred both principal and interest payments on more than 2,100 renovation and education loans.
As of today, the fixed rate for mortgage loan is about 1.48% for 3 years and the 1 month SIBOR remains at a low of 0.25%.