Sumary of Tharman: No worrying signs of rising indebtedness among young adults:
- The Monetary Authority of Singapore (MAS) has put in place a number of prudential limits on borrowing by individuals and households so that they do not borrow beyond their means.
- “Average monthly default rates amongst borrowers below 30 years of age have remained low at less than 0.7 per cent from March 2020 to March 2021. The number of young adults with credit card rollover balances dropped by 23 per cent from March 2020 to March 2021. Their average rollover balances also fell by 15 per cent year-on-year.
- ” Ms Foo had asked whether the increase in personal debt among young adults below 30 years in the past year is sustainable and what preventive measures can be put in place to avoid youth indebtedness from taking root here.
- Mr Tharman said: “Unsecured borrowing by an individual is subject to the individual meeting minimum income requirements, and the total amount of such borrowing is capped at his or her annual income.
- ” The number of young adults with unsecured personal loans fell by 33 per cent from March last year to March this year, and the average level of such loan balances fell by 21 per cent, he said.
- He said the average outstanding balances of mortgages by young adult borrowers fell by 12 per cent over the same period.
- “Whilst the average balances for secured personal loans, excluding mortgage loans, increased by 4 per cent in the same period, these were typically offered by private banks to high-net-worth individuals.
- “Young adults with secured personal loans make up less than 1 per cent of the young adult population.