MAS Extends Loan Relief Measures for Borrowers Hit by Covid-19

As the Covid-19 pandemic continues to affect lives and livelihoods, Singapore’s MAS is extending its loan relief measures for various groups of borrowers into 2021.

October 5, 2020 | AtoZ Markets – The Monetary Authority of Singapore (MAS) along with the Association of Banks in Singapore (ABS) and the Finance Houses Association of Singapore, has extended the Republic’s loan repayment program into 2021 to provide extra relief to borrowers hit by the fallout from the novel Covid-19 pandemic.

According to the press release, this decision is intended to give those who have applied to defer loan repayments more time to resume their debt servicing. The reliefs are also available to those who have not applied to defer payments previously but are now facing cash flow challenges.

MAS continues to provide loan relief for borrowers facing challenges

According to the MAS, the extended measures will allow both businesses and individuals to gradually resume full loan repayments, as the central bank and the financial industry recognize that many will continue to experience cash flow pressures into early 2021.

However, MAS has urged borrowers who are able to resume paying loan installments in full to start doing so from Jan 1, 2021, as further postponement increases their overall debt.

“We want to continue providing relief to borrowers facing cash flow challenges while encouraging them to resume loan repayments to the extent they are able to, so that they do not accumulate too much debt,” said MAS managing director Ravi Menon.

“A good outcome is one where individuals and SMEs are able to use the support measures to help them tide through the current economic difficulties and emerge with a sustainable debt burden as the economy recovers,” he added.

Loan repayment relief for individual

Measures for which the application period has been extended to June 30, 2021, include converting credit card balances to a lower interest term loan.

Those who are not able to resume full loan repayments on their property loans may apply to make reduced installment payments pegged at 60% of their monthly installment, for a period of up to nine months.

Individuals servicing renovation and student loans may also apply to extend loan tenures by up to three years.

Eligibility criteria for these two measures include proof of income loss. The application period closes on June 31, 2021.

As of August, some 36,000 applications have deferred property loan payments. A spokesman for MAS said:

“Broadly, the number of mortgage deferments has tapered off, since the peak in April to June 2020 when more individuals were affected by the circuit breaker measures.”

MAS approved about 34,000 mortgage relief applications in June.

DBS Bank has approved some 9,000 home loan repayment relief applications amounting to $5.2 billion so far, while OCBC Bank has approved over 8,000 mortgage, car, and renovation loan relief applications totaling over $5 billion.

UOB has received more than 8,000 applications to defer mortgage repayments and more than 4,000 applications to convert unsecured debt into lower-cost term loans. It said it approved the majority of them.

Reliefs for SMEs

MAS has also given further support to SMEs, by allowing the deferment of loan payment beyond 2020.

Before now, companies could apply to defer principal repayments on their secured loans granted by banks or finance companies until Dec 31, 2020. However, the current Extended Support Scheme – Standardised will allow businesses in sectors most affected by the coronavirus to defer 80% of principal payments until June 30, 2021.

This applies to SMEs in the following sectors: aviation and aerospace, tourism, hospitality, conventions, and exhibitions, built environment, licensed food shops, and food stalls, qualifying retail outlets, arts and entertainment, marine and offshore, as well as land transport.

Firms in other sectors can apply to defer 80% of principal payments until March 31, 2021.

Loans granted under Enterprise Singapore’s (ESG) enhanced working capital loan scheme and temporary bridging loan program are also eligible for deferment.

Last month, more than 18,000 enterprises have taken loans under ESG’s schemes, with a total loan quantum exceeding $14.5 billion. Over 5,400 applications have deferred principal payments on secured term loans as of August.

Think we missed something? Let us know in the comment section below.

Share Your Opinion, Write a Comment