Around 116,000 borrowers buried neck-deep in debt

Is Singapore at risk?

A report by HSBC revealed that there are roughly 116,000 over-extended borrowers in Singapore.

84,000 of these borrowers have debt worth more than 12x their monthly income, while 32,000 have debt worth over 24x their monthly income.

HSBC stated that this figure is not insignificant in a population of just 5.3m, translating to approximately 5% of total borrowers.

"However, this debt corresponds to 0.4% of system financial assets – a relatively small amount. Even if the entirety of the group were unable to service its debt, it would still leave NPLs at manageable levels," HSBC stated.

"What is perhaps of more concern is if the continued easing of house prices along with a weaker domestic economy translates to a larger group of borrowers running into payment difficulties. A stress test by the MAS revealed that under a worst case scenario of short-term rates jumping 300bp, about 10-15% of households would be considered over-leveraged. Considering the extreme assumptions used in the study, that still appears like a low number, in our view," HSBC added.