More support is on offer to help people hit by the economic downturn to meet mortgage and insurance payments.
One key measure is to lower interest rates on personal unsecured credit. This allows eligible borrowers to convert unsecured debt to a term loan before Dec 31.
A person paying an interest rate of 26 per cent a year for credit cards, for example, would instead pay an interest rate of approximately 4.3 per cent (or an effective interest rate of 8 per cent) for the term loan.
Another initiative will let people with residential mortgages defer repayments, subject to conditions.
If you have life and health insurance policies, you can apply to defer premium payments. Those with general insurance policies can apply for flexible payment plans.
Banks said the take-up rate for the new initiatives has been high.
DBS Bank received more than 1,200 applications for term loan relief from customers with unsecured credit card or Cashline loans, and over 8,000 applications for mortgage payment relief.
United Overseas Bank has received almost 4,500 applications to defer mortgage repayments and nearly 600 to convert outstanding unsecured loan balances.
OCBC Bank has fielded more than 3,000 applications to defer mortgage repayments and over 300 applications to convert outstanding credit card and personal loan balances to term loans.
Mr Sunny Quek, OCBC’s head of consumer financial services, Singapore, said: “We have also deployed robotics to automate decisioning to make sure all applications can be approved and as quickly as possible. This enables us to get back to the customer within three to four working days.”
HOW DOES THIS HELP ME?
Take a 50-year-old with a home mortgage of $640,000 at 3 per cent interest rate, with 24 years left. His monthly instalment is $3,100 and the loan will be fully repaid in 2044.
Under the new measures, he can pay just $1,600 a month up to December this year if he chooses to defer principal repayment and pays only interest.
From January next year, he will pay $3,200, if he does not extend the loan tenure. But he can also choose to pay nothing for the rest of this year and then pay $3,300 a month from January next year.
However, a person should first refinance his housing loan if he is out of the lock-in period before considering a payment deferment, said the Monetary Authority of Singapore. “Given that interest rates have fallen, refinancing his housing loan will reduce his monthly instalment immediately,” it added.
“If he needs to take up a payment deferment, he will also incur less interest cost, than if he did not refinance his housing loan.”
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