According to the recent financial report by Monetary Authority of Singapore (MAS), the nation’s economic status is headed for an unprecedented economic recession, with a predicted -4% GDP growth in 2020, potentially the worst hit since the 3.1% contraction seen way back in 1964. With many wages cut and furloughed workers left uncertain about the grim future, the MAS has stepped up yet another bout of fiscal stimulus, this time covering a broader range of loan deferments to cater to the needs of more locals amidst the pandemic. The 3 main objectives of this stimulus are to provide (a) Ease of Cashflows, (b) Reduce Debt amounts and (c) Ensuring access to Basic Banking Services. This article will provide you with a comprehensive summary of what are some of the relief measures released by the MAS that you may be eligible for!
Target Audience: Individuals
In our previous article, we have introduced several of MAS’ relief measures for individuals, including Lower Interests accrued on Personal Unsecured Credit. This time, the MAS has dished out several more measures in place. The table below provides an overall summary of what are some of the loan deferments that are made newly available to individuals. Across all, loan tenures may be extended by up to the corresponding deferment periods and you can also be rest assured that you credit scores will be secured!
|Loan Deferment Category||Things to Note|
|Mortgage Equity Withdrawal Loans (MWL)||· You may apply to your financial institution to defer principal payment and/or interest payments up till 31st December 2020
· Interest will accrue only on the deferred principal sum
· However, property loan rules applying to MWLs such as Total Debt Servicing Ratio (TDSR) and Loan to Value (LTV) remain valid
· The deferment will not cause the loan to be reflected as a restructured loan in the borrowers’ credit bureau report.
|Motor Vehicle Loans and Hire Purchase Agreements||Do discuss with your relevant financial institutions on how they can offer alternative repayment plans!
(Financial Institutions may look into factors such as individual’s income, the utility value of the vehicle, and current market conditions surrounding the vehicle market value)
|Renovation and (Non-MOE) Student Loans||· You are able to apply to your financial institutions to seek deferments on principal and/or interest payments up till 31st December 2020|
Original Source from MAS
For individuals currently subscribed under the existing Debt Consolidation Plans (DCP), borrowers are eligible for 5 years extension on their loan tenure. Individuals also do not have to prove that they were affected by the COVID-19 pandemic to be eligible for these deferments. All deferred loans arising during this pandemic will not result in the loan being reflected as a restructured loan. The above loan deferments are to support Individuals by allowing temporal uplifting of financial commitments to free up cashflows for other more important usages. Again, a word of caution that loan deferments should only be taken up in times of necessity, as the extension of loan durations could potentially result in overall higher interests payable!
Apart from Loan Deferments, the MAS has stepped in to reduce individual debt ratios, part (b) of the objectives for the fiscal stimulus. In the second iteration of relief support, the MAS has allowed for individuals to apply for refinancing and repricing of loans, again without being subjected to TDSR and Mortgage Servicing Ratio (MSR) up till the 31st of December. You will not be required to commit to a debt repayment plan even if you do not meet the TDSR or Mortgage Servicing Ratio (MSR) requirements.
Last but not least, the MAS ensures that individuals are granted unrestricted access to Basic Banking Services. With many businesses rolling down their shutters, workers are inevitably affected by pay-cuts and potential retrenchments. Hence, the government hopes to cushion the impact by omitting the charge of Accounting Fees imposed by Retail banks. These include waivers of fall-below service (when your bank balance falls below a certain Daily threshold) and/or any outstanding failed GIRO deduction charged up to 31st December 2020. For this measure, however, proof of income impact must be made evident for eligibility to be granted. Do also note that this does not affect the relevant payee companies’ decision on late/failed repayments.
This second iteration of relief measures are highly focused on individuals. For business owners of SMEs in Singapore, the measures prior announced in the first iteration still stand. Do check out our previous article to find out more about how you as an SME business owner are eligible for the various relief packages!
We hope that this article has provided you with an overview of what are some support measures you may be eligible for in these trying times. For more specific and tailored advice, do reach out to your respective Financial Institutions or find out more on the MAS official website! Let us all stay home and stay safe during this “circuit breaker” period.