01 Aug '13, 5pm
Worries in Singapore about overexposed banks as household debt soars
Singapore’s banks look well-capitalised. One of them, DBS, points out that although Singapore’s debt has risen faster than, say, Hong Kong’s, Singapore’s GDP per person has grown much faster, too. The danger, warns Ravi Menon, the head of the MAS, will come when interest rates move up again. His concern is that borrowers have been lulled by low interest rates over a long period of time, and could be woefully unprepared for rate rises. This, he says, poses “significant risks” to household balance-sheets. According to the MAS, 5-10% of borrowers may already have accumulated too much debt, defined as spending over 60% of a monthly salary in debt repayments. If interest rates rose by three percentage points, then 10-15% of borrowers could be at risk.