National Development Minister Mah Bow Tan expects the number of defaults on Housing Development Board (HDB) home loans to increase if the economy “goes down even further”, saying that further job losses would inevitably lead to more arrears cases coming up.
Since the last downturn, the Singapore government has been taking on measures such as deferring payments, downsizing flats or extending loans to help struggling home owners.
Parliament was informed recently that approximately 33,000 owners owe the HDB arrears of three months or more. They comprise less than eight per cent of the 420,000 households with HDB loans.
In response to a question about plans to help such home owners, Mah said: “We have to look at individual cases to see what the situation is for each particular case. The main criterion is to help them to tide over … to make sure there is a sustainable solution.”
According to Mah, deferring mortgage payments does not help in the longer term as home owners would still have to pay and interest builds up. Owners are encouraged to downgrade if they are not able to afford a large flat. In the case of financial difficulties, HDB could extend another loan, he said.
Mah cites it as an example of a sustainable solution, by making sure that the loans are smaller in order for home owners to survive the crisis and build up their finances from then on.
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