Risks remain for borrowers:
MAS
The property cooling
measures introduced in Singapore in recent years have curbed the
growth in home loans. But some households may remain financially
vulnerable, the Monetary Authority of Singapore (MAS) said
yesterday.
Demand for homes from investors and speculators has
dropped, going by the proportion of borrowers who take up a second
or subsequent housing loan, MAS said in its annual financial
stability report.
But it warned: "More sluggish economic growth, less
favourable labour market conditions and less bullish sentiment
could lead to a turn in the property cycle, possibly at the same
time that interest rates rise.
"Such a scenario could lead to a concurrent erosion
of household net wealth and higher debtservicing burdens.
Overleveraged households would be more vulnerable to such
shocks."
It noted that mortgage loans account for about
three-quarters of household debt and said close monitoring of
Singapore's property market continues to be needed.
MAS also said that as developed economies recover
and withdraw their easy monetary policies; there could be
considerable risks for Singapore.
PARTICULAR CONCERN
Of particular concern is the build-up of private and public
sector debt in recent years, MAS said.
The scaling back of stimulus measures by developed
economies could lead to debt servicing burdens in Asia rising
sharply.
But MAS noted that corporate and household balance
sheets are healthy in aggregate and the banking system has held up
well under stress tests.
Still, it said the banking sector has to guard
against a potential rise in bad credit, especially in regional
operations.
News, The New Paper, Wednesday, December 4 2013, Pg 4
