Singapore banks offer to freeze mortgage, business loan payments

01-Apr-2020 Intellasia | Bloomberg | 6:02 AM Print This Post

Singapore’s central bank said local lenders will help clients with good credit history meet their loan obligations and access financing during the virus-induced economic downturn, while ensuring banks have low-cost funding.

Banks and finance companies can defer both principal and interest payments for qualified clients through December 31, the Monetary Authority of Singapore said in a statement Tuesday. Small and medium-sized firms can opt to defer principal payments on their secured term loans up to the end of the year, the MAS said.

Singapore banks including DBS Group Holdings Ltd and Oversea-Chinese Banking Corp. are already taking their own steps to help small firms and individual clients by allowing them to delay principal repayments for varying periods.

The MAS’s latest loan relief adds to several other fiscal and monetary measures the city state is employing after the pandemic induced the worst economic downturn in a decade in the first quarter. Even before the virus outbreak, bankruptcies for both individuals and companies in Singapore rose to the highest in more than 14 years.

Given deep capital buffers, ample liquidity and low leverage, Singapore lenders “are well placed to not only ride out the economic storm caused by Covid-19, but also provide meaningful relief to individuals and SMEs affected by the crisis,” MAS Managing director Ravi Menon said in the release.

Deputy prime minister Heng Swee Keat last week unveiled a second fiscal support package of S$48 billion ($33.6 billion) to help businesses and consumers hurt by the virus outbreak. Gross domestic product fell an annualised 10.6 percent in the first quarter from the previous three months, and the government projected a severe recession for the full year.

Singapore’s central bank also took unprecedented easing steps Monday to support the trade-reliant economy. The MAS, which uses the exchange rate as its main policy tool rather than a benchmark interest rate, lowered the midpoint of the currency band and reduced the slope to zero. That implies the regulator will allow for a weaker currency to bolster exports.

The new measures will also allow life and health insurance policy holders to defer premium payments for up to six months, while customers with property insurance policies can set up an installment payment plan.

“Deferring payments increases future obligation and hence borrowers and policy holders should weigh their options carefully,” the MAS said. “Financial institutions will process all applications expeditiously.”

Other highlights of the new measures

* Corporates, including SMEs, holding general insurance policies that protect their business and property risks may apply to their insurer for installment payment plans.

* Banks and finance companies may apply for low-cost funding through a new MAS SGD Facility for loans granted under Enterprise Singapore

* Homeowners can apply for relief on principal and/or interest payments on their mortgages

* Consumers with credit card balances can apply for a term loan of up to five years.


Category: Singapore

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