Reply to Parliamentary Question on Rising Interest Rates and Mortgages
2. Most households should still be able to service their mortgages as Singapore’s domestic interest rates pick up alongside global rates from their current lows. MAS’ stress tests suggest that the median household mortgage servicing ratio will remain manageable even under scenarios of significantly higher interest rates or lower incomes. However, there will be a small segment of households with higher leverage, who will be more constrained by interest rate rises. More broadly, all borrowers should exercise caution in their home purchases, to avoid having to cut back on other household expenditures if interest rates rise sharply.3. The financial resilience of households to service their mortgages reflects the effects of measures that MAS has put in place over the years. 4. MAS also requires that FIs provide homebuyers with the information they need to make sound and prudent decisions, before extending them residential mortgages.