SINGAPORE — From May 6 onwards, individuals may request to defer repayment of a wider pool of loans, such as commercial and industrial property loans, renovation, education and motor vehicle loans, the Monetary Authority of Singapore (MAS) announced on Thursday (April 30).

This deferment will be provided by banks and financial institutions but their customers will have to opt in for it.

The latest measures are part of a second relief package rolled out by MAS to help Singaporeans who are in a financial bind due to the Covid-19 pandemic.

Last month, the central bank announced its first package, which include relief measures for mortgages and unsecured revolving credit facilities. These make up a significant portion of Singaporeans’ debt obligations.

As the pandemic continues to take a toll on the economy, MAS said that this second set of relief measures will be catered to those who need more support.

Individuals with renovation loans or student loans not covered by the Ministry of Education may apply to defer both principal and interest payments up until the end of the year.

Interest will accrue only on the principal amount and no interest will be charged on the deferred interest payments.

Borrowers do not need to demonstrate any impact from Covid-19 to secure deferment to these loans and their credit scores will not be affected, MAS said.

Eligible borrowers on debt consolidation plans who are affected by Covid-19 can also apply to their banks to extend the loan tenure of their existing plans for up to five years.

The authority warned, however, that payments deferments and loan tenure extensions will result in higher overall interest costs and borrowers should carefully consider the accumulated interest costs that they will eventually have to bear.

Its managing director Ravi Menon said: “MAS and the (finance) industry will continue to work together to see how best to help individuals and businesses ease their cash flow challenges or reduce their debt burden.”

MOTOR VEHICLE LOANS, HIRE-PURCHASE CONTRACTS

Individuals with motor vehicle loans and hire-purchase agreements in need of repayment deferment may approach their respective banks and financial institutions to discuss suitable repayment plans on a case-by-case basis, MAS said.

Factors such as the person’s financial situation, need for the vehicle, current market value of the vehicle and its estimated market value after deferment, will be taken into account in the assessment.

“If a deferment is granted, individuals can discuss with their bank or finance company on extending the loan tenure by up to the corresponding deferment period. This will ease their monthly instalments when they resume regular repayments,” MAS said.

REFINANCING LOANS, FEE WAIVERS

The total debt servicing ratio and the mortgage serving ratio put limits on the amount that people can borrow for a property loan. For the total debt servicing ratio, for example, a borrower’s monthly repayment for all debts — including mortgages, car loans and credit card bills — would usually not be allowed to exceed 60 per cent of his or her monthly income. 

To reduce debt obligations among borrowers, those with investment property loans may now apply to refinance or reprice their loans without being subject to these ratios. This applies to loans taken to buy residential, commercial and industries properties as well as mortgage equity withdrawal loans secured against the value of these properties.

However, if the loan is still within the lock-in period, contractual penalties may apply.

This exemption will allow property owners to refinance their loans to lower interest costs and debt obligations during this period, MAS said.

Individuals whose incomes have diminished due to the crisis and are unable to meet the relevant minimum balances for their retail bank accounts may also apply to have their fall-below service fees waived up to Dec 31.

Similarly, those affected by the crisis and who had set up automated payment deductions such as for insurance premiums and utilities, may apply to waive bank fees for failed deductions.

This does not have a bearing on any action that payee companies may take for failed payments, including late payment fees, if applicable.

COMMERCIAL AND INDUSTRIAL PROPERTY LOANS

Those with commercial and industrial property loans as well as mortgage equity withdrawal loans may apply to their respective banks and financial institutions to defer repayments.

Requests for deferment of commercial and industrial property loans may be approved as long as the loan repayments were current as at Feb 1.

For mortgage equity withdrawal loans:

• Borrowers can apply for a deferment even if their loans were granted after April 6

• They may apply to defer either principal payment or both principal and interest payments

WHAT BANKS ARE DOING

DBS bank said on Thursday that it is supportive of the authority’s latest relief measures and urge individuals who are concerned about their finances to approach its bank officers early.

Mr Jeremy Soo, head of consumer banking group of Singapore at DBS, said: “Today, more than two million Singapore residents already have fall-below fees waived on their DBS or POSB accounts. These include those on social assistance schemes, operationally ready national servicemen, the young, the elderly and ex-offenders.”

So far, the bank has approved the deferment of close to 8,000 mortgage principal and interest payment applications, which amounted to S$ 4.7 billion in loans.

This is in addition to allowing eligible consumers to convert their unsecured credit to term loans at a reduced interest rate.

“We’ve also provided free insurance protection against Covid-19 infections for close to one million customers and their family members in Singapore.

“As we weather the storm ahead together, we are committed to helping where we can,” Mr Soo said.

OCBC also said on Thursday that all personal loans — secured or unsecured — has come under its Covid-19 relief programme.

To date, the bank has approved S$4 billion in repayment deferment to individuals, mostly for mortgages.

Since March, OCBC has received deferment requests for car, renovation, education as well as industrial and commercial property loans. The number of requests has jumped by between 20 and 70 times within the past month for each of the four loan types.

All eligible requests have been approved even though there were no standardised relief measures for these loan types at the time.

Mr Sunny Quek, head of consumer financial services Singapore at OCBC, said: “The economic impact of the Covid-19 outbreak spares no one and so, our measures should also not leave any stone unturned. We hope that the latest tranche of support for our customers will go some way towards easing the financial strain.

“While the largest number of individuals asking for help are our home-loan borrowers, we expect the number of moratorium requests for other loan types to continue to increase over the next few weeks, as the tightened circuit breaker measures continue to financially impact more people."