The stress of paying for a house seems to be rising in tandem with home loan interest rates, a financial survey has found.
However, mortgage foreclosures are rare in Singapore, and banks have assured that they would do their best to support those facing financial difficulties in a challenging economic environment.
A Financial Wellness Index report released by OCBC on Tuesday (22 November) found that 40 percent of Singaporeans face “some difficulties in paying off their mortgage loans”, an increase from 31 percent of Singaporeans who faced such “mortgage stress” in 2021.
“More Singaporeans are unable to pay their loans on time (14 percent versus 9 percent in 2021), with more indicating they would have to sell or downgrade their homes to pay their loans (8 percent compared to 6 percent in 2021),” said OCBC in a media release.
“This has resulted in more Singaporeans worried about home financing – 38 percent worry about not being able to afford a home, an increase from 36 percent last year.”
The index was based on an online survey of 2,182 working adults in Singapore aged between 21 and 65. It was conducted in August when the three-month Singapore Overnight Rate Average (SORA) rose to 1.27 percent.
Currently, the three-month SORA stands at 2.745 percent, reported CNA.
In Singapore, a floating rate home loan is usually pegged to the Singapore Interbank Offered Rate (SIBOR), a Fixed Deposit Based Rate (FDR) or the Singapore Overnight Rate Average (SORA). But the first two are being phased out and the floating interest rate will soon be pegged only to SORA.
On 15 November, OCBC, DBS and UOB banks raised their fixed home loan interest rates to up to 4.5 percent.
A fixed home loan has interest rates that remain unchanged throughout the lock-in period. A floating loan’s interest rates vary throughout the life of the loan, depending on the economy and market conditions.
