Singapore financial vulnerability climbs, but still resilient to shocks -MAS By Reuters
Economy 11 minutes ago (Nov 25, 2022 12:07AM ET)
(C) Reuters. FILE PHOTO: People wearing protective masks as a precaution against the coronavirus disease (COVID-19) walk during lunch hour at the central business district in Singapore, December 14, 2020. REUTERS/Edgar Su
By Xinghui Kok
SINGAPORE (Reuters) – Singaporean households, corporates and banks have seen an increase in financial vulnerability this year, the city-state’s central bank said on Friday, warning people to be prudent about taking on more mortgage debt.
The higher vulnerability was mostly due to the unwinding of pandemic-related precautionary buffers, the Monetary Authority of Singapore said in its annual financial stability review.
However, the central bank’s stress test showed corporates and households were “resilient to macrofinancial shocks”, while banks hold strong capital positions.
The central bank noted, however, that households – especially those in lower-income groups – should be prudent when committing to mortgage loans, given financial conditions were expected to tighten further in coming quarters.
It said housing loans remained the key driver of a rise in household debt, contributing 2.7 percentage points to the overall 3.1% year-on-year growth in the third quarter of 2022.
The silver lining was that the credit quality of housing loans had improved over the past year after tighter rules were introduced in December last year.
Loan-to-value ratios have fallen to 43% in the third quarter of 2022 from 54% in 2017, and just 30 units were foreclosed this year.
Globally, the Monetary Authority of Singapore expects growth to slow sharply over the next year with inflation likely to remain “significantly” above the target of many central banks.
Singapore’s central bank said the risk of inflation and interest rates remaining higher for longer than previously expected will worsen the debt burden for vulnerable households and businesses, putting greater stress on banks.
“However, banks are better positioned than in the Global Financial Crisis to manage these credit risks and absorb losses,” said the central bank.
Singapore financial vulnerability climbs, but still resilient to shocks -MAS
By Tetsushi Kajimoto TOKYO (Reuters) – Japan’s factory output likely fell for a second straight month in October, while retail sales probably grew at the fastest pace since May…
BEIJING (Reuters) -Tesla Inc is recalling more than 80,000 China-made and imported cars produced from as early as 2013, for software and seat belt issues, a statement by the…
KUALA LUMPUR (Reuters) – Malaysia’s consumer price index (CPI) rose 4% from a year earlier in October, government data showed on Friday. The rise was slightly faster than the…
(C) 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.