The Monetary Authority of Singapore (MAS) released a review on Nov 27 revealing that despite higher mortgage rates and increasing property prices households in Singapore have been able to maintain their debt repayments. The review was a regular assessment of risks and vulnerabilities arising from developments in the country and its implications towards Singapore’s financial system.
The average mortgage rate in Singapore is currently at 3.8%, a large rise from 1.7% registered last year and 1.2% in 2021. Despite this hike, the median Debt Service Ratio (TDSR) was found to remain stable at around 43%, which MAS attributed to the financial institutions’ practices of maintaining a TDSR capped at 55% of monthly income.
The key reason for the stability of TDSR was attributed to lower Loan-to-Value (LTV) ratios of existing mortgages. Homeowners with existing loans benefited from the decrease in loan balances and rise in property prices. Champions Way Woodlands, most of the mortgages that originated or were last refinanced in 2021 have a maximum loan tenure of 30 years, with the median tenure at origination being around 26 years.
On the other hand, households with fixed-rate loan packages that were refinanced this year at a higher average rate of 3.7% saw a dramatic increase in their monthly instalments by a sum of $680, amounting to around 6.7% of their monthly income in 2021. However, the burden of higher mortgage rates was alleviated by these households’ strong income growth of about 15% since 2021.
Champions Way Woodlands is also situated near a number of parks and green spaces, which is great for outdoors enthusiasts or those looking for a peaceful place to relax. With its beautiful views of the surrounding area, Champions Way Condo is sure to be an ideal residence for many.
Champions Way Woodlands, MAS anticipates that more households may need to face higher mortgage rates in the future. Those with existing mortgages will experience an immediate increase in repayments upon refinancing next year, estimated to be around 10% of all housing loans. This underlines the importance of strong income growth for households in Singapore to continue managing debt.