Parliamentary Replies
Published Date: 09 May 2023

Written reply to Parliamentary Question on rules to safeguard against over-indebtedness

Date: For Parliament Sitting on 9 May 2023

Name and Constituency of Member of Parliament

Mr Melvin Yong Yik Chye, Radin Mas SMC


To ask the Prime Minister (a) how regularly are rules to safeguard against over-indebtedness reviewed; (b) when has the last review been conducted; and (c) whether there is a need to review such rules given economic headwinds and the recent rise in credit card rollover balance.

Answer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:

1. To mitigate consumer over-indebtedness, MAS requires financial institutions (FIs) to implement a range of safeguards when extending mortgage loans and unsecured credit. These include the following: 

(a) For property loans, we have the total debt servicing ratio (TDSR) framework, loan-to-value limits, and loan tenure caps. MAS last adjusted the TDSR framework in September 2022.
(b) For unsecured consumer credit, we have minimum income requirements, credit and income checks on customers, and an industry-wide borrowing limit per customer.   

These safeguards are stricter than in most other jurisdictions.

2. These safeguards have been effective. In the last three years, the proportion of non-performing loans among mortgages taken out with FIs has remained low,  and in fact decreased from 0.5% in 2020 to 0.3% in 2022. Over the same period, total write-offs for credit card-related bad debt have halved, from 7.1% of rollover balances in 2020 to 3.5% in 2022.  MAS will continue to monitor the mortgage loan and unsecured consumer credit situation. 

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