Response to a parliamentary question on personal debt among young adults





Date: For the sitting of Parliament on September 14, 2021

Name and constituency of deputy

Ms. Foo Mee Har, MP, West Coast GRC


Ask the Prime Minister a) if the increase in personal debt of young adults under 30 over the past year is sustainable; b) what preventive measures can be put in place to prevent youth indebtedness from taking root in Singapore.

Response from Mr. Tharman Shanmugaratnam, Prime Minister and Minister in charge of MAS:

1 The MAS has put in place a number of prudential limits on the borrowing of individuals and households, so that they do not borrow beyond their means. They are generally more extensive and stricter than in many countries.

2 Unsecured borrowing by an individual is subject to the individual’s minimum income requirement, and the total amount of such borrowing is capped at his annual income. Mortgages, which are the largest household liability, are subject to both a loan / value limit and a total debt service limit.

3 So far, there are no worrying signs of increasing debt among young adults. Average monthly default rates among borrowers under 30 remained low at less than 0.7% from March 2020 to March 2021.

4 The number of young adults with credit card renewal balances declined 23% from March 2020 to March 2021. Their average renewal balances also declined 15% year-over-year.

5 The number of young adults with unsecured personal loans declined by 33% over the same period, and the average level of these loan balances declined by 21%.

6 As for guaranteed loans, the average outstanding mortgage loans of young adult borrowers fell by 12% between March 2020 and March 2021. While the average outstanding guaranteed personal loans, excluding mortgage loans, increased by 4% over the same period. period, were generally offered by private banks to high net worth individuals. Young adults with secured personal loans represent less than 1% of the young adult population.

7 In addition to regulatory borrowing limits, financial education helps instill good financial habits in our young adults. Key financial concepts have been added to the curriculum from elementary school to senior level; concepts such as the effects of compound interest and the responsible use of credit. The efforts are complemented by outreach activities organized on school campuses by MoneySense, our national financial education program.

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