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Monetary Authority Of Singapore And Financial Industry Provide Additional Support For Individuals

Date 30/04/2020

The Monetary Authority of Singapore (MAS), the Association of Banks in Singapore (ABS) and the Finance Houses Association of Singapore (FHAS) today announced a second package of measures to support individuals facing financial difficulties due to the COVID-19 pandemic. This second package will extend the scope of relief for individuals to other types of loan commitments, and allow them to continue to have access to affordable basic banking services.

2   On 31 March 2020, MAS and the financial industry announced the first industry support package to help individuals and businesses affected by the COVID-19 pandemic. For individuals, this included relief measures for mortgages and unsecured revolving credit facilities, which make up a significant portion of individuals’ debt obligations.

3   As the economic outlook remains challenging and there continues to be significant uncertainty over the depth and duration of this downturn, the latest package of measures will provide further support to affected individuals. The new measures are summarised below:

             

Objectives

Relief Measures

Ease cashflow
  1. Defer Repayment for:
    • Commercial and industrial property loans
    • Mortgage equity withdrawal loans
    • Renovation and student loans
    • Motor vehicle loans and hire-purchase agreements, subject to assessment
  2. Extend Loan Tenure for Debt Consolidation Plans (DCPs)

Reduce debt
  1. Refinance investment property loans, without being subject to the total debt servicing ratio and mortgage servicing ratio

Ensure access to basic banking services
  1. Waive fall-below service fees and failed GIRO deduction charges for retail bank accounts

4   Similar to the first industry support package, this second set of relief measures for individuals will be provided by financial institutions on an opt-in basis, as each individual’s financial situation is different. As payment deferments and loan tenure extensions will result in higher overall interest costs, individuals should carefully consider the accumulated interest costs they will eventually have to bear, and balance this against their need for temporary cashflow relief.

5   Individuals do not need to demonstrate the impact from COVID-19 to obtain these reliefs, and their credit scores will not be affected when they take up payment deferments. Individuals can also opt to extend the loan tenure by up to the corresponding deferment period to ease monthly instalments when they resume regular repayments.

6   Applications for these relief measures will start from 6 May 2020, except for the loan tenure extensions for DCPs which will be open for application from 18 May 2020.

7   Financial institutions aim to process all applications promptly. However, a high volume of applications could lead to some delays.

Easing Cashflow

Defer Repayment of Commercial and Industrial Property Loans

8   Individuals with commercial and industrial property loans may apply to their respective bank or finance company to defer principal payments up to 31 December 2020. Lenders will approve the request for deferment as long as the individuals’ loan repayments were current as at 1 February 2020 [1] .

Defer Repayment of New Mortgage Equity Withdrawal Loans

9   Individuals with mortgage equity withdrawal loans [2] that are granted on or after 6 April 2020 may apply to their respective bank or finance company to defer either (i) principal payment or (ii) both principal and interest payments up to 31 December 2020. For (ii), interest will accrue only on the deferred principal amount; no interest will be charged on the deferred interest payments.

10   This will help individuals, including sole proprietors, facing temporary cashflow issues to monetise the equity in their existing properties [3] to meet business expenses and family needs, and have the flexibility to make repayments at a later date. This supplements the residential mortgage relief measure announced on 31 March 2020 as well as the above relief measure for commercial and industrial property loans. With this additional measure, borrowers can apply for payment deferments on their mortgage equity withdrawal loans, regardless of when the loans were granted.

Defer Repayment of Renovation and Student Loans

11   Individuals with renovation or non-MOE [4] student loans may apply to their respective bank to defer both principal and interest payments up to 31 December 2020. Interest will accrue only on the principal amount; no interest will be charged on the deferred interest payments.

Defer Repayment of Motor Vehicle Loans and Hire-Purchase Agreements, subject to Assessment

12   Individuals with motor vehicle loans and hire-purchase agreements who are affected by COVID-19 and are in need of payment deferment can approach their respective bank or finance company to discuss suitable repayment plans on a case-by-case basis.

13   In its assessment, the bank or finance company will take into account factors such as the individual’s financial situation, need for the use of a motor vehicle, the current market value of the motor vehicle and its estimated market value after the deferment period (if applicable). 

14   If a payment deferment is granted, individuals can discuss with their bank or finance company on extending the loan tenure by up to the corresponding deferment period. This will ease individuals’ monthly instalments when they resume regular repayments.

Extend Loan Tenure of Existing Debt Consolidation Plans (DCPs)

15   Eligible individuals on DCPs who are affected by COVID-19 may apply to their respective bank to extend the loan tenure of their existing DCPs for up to 5 years. This will help them lower their monthly instalment repayments.

Reducing Debt Obligations

Refinance or Reprice Investment Property Loans without being subject to the Total Debt Servicing Ratio and Mortgage Servicing Ratio

16   Individuals with investment property loans [5] can apply to refinance or reprice their loans, without being subject to the total debt servicing ratio (TDSR) and mortgage servicing ratio (MSR). Consequently, individuals who do not meet TDSR and MSR will not need to commit to a debt repayment plan to repay 3% of their outstanding loan amount over 3 years. Individuals will need to consider the contractual penalties involved if they refinance or reprice their loans within the lock-in period.

17   Individuals can rely on this exemption to refinance or reprice their loans to lower their interest costs and debt obligations during this period. Any subsequent applications to defer mortgage repayments for refinanced or repriced loans will be assessed by their bank or finance company on a case-by-case basis.

Ensuring Access to Basic Banking Services

No Fall-Below Service Fees and Failed GIRO Deduction Charges for Retail Bank Accounts

18   Individuals whose incomes are impacted by COVID-19 and are not able to meet the relevant minimum average daily or monthly balances for their retail bank accounts can apply to have fall-below service fees waived up to 31 December 2020.

19   Similarly, those who are impacted by COVID-19 and have set up GIRO arrangements for automated payment deductions (e.g. insurance premium and electricity/phone bill payments) from their retail bank accounts can apply to have bank fees waived for any failed deductions up to 31 December 2020. This does not affect any action that payee companies may take for failed payments, including late payment fees, if applicable.

20   Mr Ravi Menon, MAS Managing Director said, “MAS and the financial industry will do all we can to support individuals affected by the COVID-19 crisis. Together with the help measures announced on 31 March, we now have a fairly comprehensive financial relief package for individuals and small businesses. MAS and the industry will continue to work together to see how best to help individuals and businesses ease their cash flow challenges or reduce their debt burden.”

21   Mr Samuel Tsien, Chairman, the Association of Banks in Singapore said, “As the COVID-19 pandemic continues to impact the cashflow of our customers, the banking industry has worked with the MAS to further enhance our relief measures. ABS and the banks in Singapore are committed to providing our customers with the support they need during these trying times.”

22   Mr Lee Sze Leong, Chairman, Finance Houses Association of Singapore said, “The finance companies fully support the additional relief measures to help our customers ride through this difficult period. These additional measures will provide further relief to individuals and businesses affected by the COVID-19 crisis and alleviate their financial burden.”

***

MAS AND FINANCIAL INDUSTRY’S SECOND SUPPORT PACKAGE

 

Facility

Features

Ease cashflow

Defer Repayment of Commercial and Industrial Property Loans

 

Scope

  • Existing loans taken to purchase commercial and industrial properties, as well as mortgage equity withdrawal loans secured on these properties, including debt reduction plans.
  • Borrowers can choose to defer repayment of principal up to 31 Dec 2020.
  • Borrowers can choose to extend the loan tenure by up to the corresponding deferment period.
  • The deferment will not cause the loan to be reflected as a restructured loan in the borrowers’ credit bureau report.

Eligibility

  • Opt-in basis, for borrowers with loan repayments that are current (i.e. no outstanding repayment) as at 1 Feb 2020.
  • No need for borrowers to demonstrate any impact from COVID-19.
  • Granted expeditiously in response to borrowers’ request for deferment.
  • Borrowers are not subject to the total debt servicing ratio (TDSR) when applying for deferment.

Customer Education

  • Borrowers will be given illustrations of:
  • the monthly repayment amount during the deferment period and the monthly repayment amount when they resume regular repayments; and
  • the total interest payable by borrowers over the entire loan tenure before and after opting for the principal deferment, and tenure extension, if applicable.

Defer Repayment of New Mortgage Equity Withdrawal Loans Granted after 6 April 2020

 

Scope

  • Mortgage equity withdrawal loans secured on residential, commercial and industrial properties
  • Borrowers can choose to defer repayment of principal or both principal and interest up to 31 Dec 2020. Options may vary between different banks and finance companies.
  • Where there is deferment of principal and interest payments, interest will accrue only on the deferred principal amount i.e. interest-on-interest is waived.
  • Borrowers can choose to extend the mortgage tenure by up to the corresponding deferment period.
  • After the deferment period, the loan amount together with the interest accrued on the deferred principal amount will be fully amortised over the remaining loan tenure (i.e. no balloon repayment).
  • The deferment will not cause the loan to be reflected as a restructured loan in the borrowers’ credit bureau report.

Eligibility

  • Opt-in basis, for borrowers with mortgage equity withdrawal loans (MWLs) that are granted on or after 6 Apr 2020.

    Note:

    • This measure helps individuals (including sole proprietors) facing temporary cashflow issues to monetise the equity in their existing properties to meet business expenses and family needs, and have the flexibility to make repayments at a later date.
    • This measure supplements the residential mortgage relief measure announced on 31 March 2020 as well as the above relief measure for commercial and industrial property loans.
    • With this additional measure, borrowers can apply for payment deferments on their mortgage equity withdrawal loans, regardless of when the loans were granted.

       

  • No need for borrowers to demonstrate any impact from COVID-19.
  • Property loan rules for obtaining new mortgage equity withdrawal loans (e.g. total debt servicing ratio and loan-to-value limits) continue to apply.

Customer Education

  • Borrowers will be given illustrations of:
  • the monthly repayment amount (if any) during the deferment period and the monthly repayment amount when they resume regular repayments; and
  • the total interest payable by borrowers over the entire loan tenure before and after opting for the repayment deferment, and tenure extension, if applicable.

Defer Repayment of Renovation Loans

 

Scope

  • Renovation loans
  • Borrowers can choose to defer repayment of both principal and interest up to 31 Dec 2020.
  • Interest will accrue only on the deferred principal amount i.e. interest-on-interest is waived.
  • Borrowers can choose to extend the loan tenure by up to the corresponding deferment period.
  • After the deferment period, the loan amount together with the interest accrued on the deferred principal amount will be fully amortised over the remaining loan tenure (i.e. no balloon repayment).
  • The deferment will not cause the loan to be reflected as a restructured loan in the borrowers’ credit bureau report.

 

Eligibility

  • Opt-in basis, for borrowers whose loan repayments are no more than 90 days past due at the point of application.
  • No need for borrowers to demonstrate any impact from COVID-19.
  • Granted expeditiously in response to borrowers’ request for deferment.

Customer Education                

 

  • Borrowers will be given illustrations of:
  • the monthly repayment amount when they resume regular repayments; and
  • the total interest payable by borrowers over the entire loan tenure before and after opting for the principal deferment, and tenure extension, if applicable.

Defer Repayment of Education / Study / Student Loans

 

Scope

  • Full-time and part-time programmes at local and foreign private tertiary institutions [i.e. non-MOE student loans]
  • Borrowers can choose to defer repayment of both principal and interest up to 31 Dec 2020.
  • Interest will accrue only on the deferred principal amount i.e. interest-on-interest is waived.
  • Borrowers can choose to extend the loan tenure by up to the corresponding deferment period.
  • After the deferment period, the loan amount together with the interest accrued on the deferred principal amount will be fully amortised over the remaining loan tenure (i.e. no balloon repayment).
  • The deferment will not cause the loan to be reflected as a restructured loan in the borrowers’ credit bureau report

Eligibility                

 

  • Opt-in basis, for borrowers whose loan repayments are no more than 90 days past due at the point of application.
  • No need for borrowers to demonstrate any impact from COVID-19.
  • Granted expeditiously in response to borrowers’ request for deferment.

Customer Education

  • Borrowers will be given illustrations of:
  • the monthly repayment amount when they resume regular repayments; and
  • the total interest payable by borrowers over the entire loan tenure before and after opting for the repayment deferment, and tenure extension, if applicable.

Defer Repayment of Motor Vehicle Loans and Hire-Purchase Agreements, Subject to Case-By-Case Assessment

 

Scope

  • Motor vehicle loans and hire-purchase agreements
  • Subject to case-by-case assessment
  • Borrowers with car loans who are in need of payment deferment can approach their respective banks and finance companies to discuss suitable repayment plans.
  • In its assessment, the bank or finance company will take into account factors such as the borrowers’ financial condition, need for the use of a motor vehicle, current market value of the motor vehicle and its estimated market value after the deferment period (if applicable).
  • If a payment deferment is granted, borrowers can discuss with their bank or finance company on extending the loan tenure by up to the corresponding deferment period. This will ease the borrowers’ monthly instalments when they resume regular repayments.
  • The deferment will not cause the loan to be reflected as a restructured loan in the borrowers’ credit bureau report.

Extend Repayment of Debt Consolidation Plans (DCP)

 

Scope

  • Debt Consolidation Plans

 
  • Borrowers who are on DCP can apply to extend the loan tenure of their existing DCP for up to 5 years, anytime from 18 May 2020 to 31 Dec 2020.
  • The extension of loan tenure will not cause the loan to be reflected as a restructured loan in the borrowers’ credit bureau report.

Eligibility                

 

  • Opt-in basis, for borrowers who are impacted by COVID-19 (impact on income required) and whose repayments are between 30 and 90 days past due at the point of application.
  • Granted expeditiously in response to borrowers’ request for deferment.

Customer Education                

 

  • Borrowers will be given illustrations of:
  • the monthly repayment amount before and after the tenure extension; and
  • the total interest payable by borrowers over the entire loan tenure before and after the tenure extension.

Reduce Debt Obligations

Easier Refinancing or Repricing of Investment Property Loans

 

Scope

  • Loans taken to purchase residential, commercial and industrial properties, as well as mortgage equity withdrawal loans secured on these properties.
  • Borrowers with investment property loans that are out of the lock-in period can apply to refinance or reprice their loans, without being subject to the total debt servicing ratio (TDSR) and mortgage servicing ratio (MSR) under MAS’ property loan rules [6] , up to 31 Dec 2020.
  • Consequently, borrowers who do not meet TDSR and MSR will not need to commit to a debt repayment plan to repay 3% of their outstanding loan amount over 3 years.
  • Borrowers can rely on this exemption to refinance or reprice their loans to lower their monthly payments. Any subsequent application to defer property loan repayments will be assessed by on a case-by-case basis.
  • If the loan is still within the lock-in period, contractual penalties may apply.

Ensure Access to Basic Banking Services

Waiver Of Fall-Below Bank Account Service Fees and Failed GIRO Deduction Charges

 

Scope

  • Retail bank account service fees
  • Individuals who are not able to meet the relevant minimum average daily or monthly balances for their retail bank accounts can apply to have fall-below service fees waived up to 31 Dec 2020.
  • Individuals who have set up GIRO arrangements for automated deductions of payments (e.g. for insurance premium and electricity/phone bill payments) from their retail bank accounts can apply to have bank fees for any failed deductions waived up to 31 Dec 2020. This does not affect any action that payee companies may take for failed payments, including late payment fees (if applicable).

Eligibility

  • Opt-in basis, for individuals who are impacted by COVID-19 (impact on income required).

 

  1. [1] 1 February 2020 is in line with the COVID-19 (Temporary Measures) Act, and is the approximate date when the impact of COVID-19 started to be significantly felt in Singapore’s economy. This is also aligned with the previous criteria for individuals to have loan repayments that are no more than 90 days past due as at 6 April 2020 – a loan account which was current as at 1 February 2020 will also not be more than 90 days past due as at 6 April 2020.

 

 

  1. [2] These include loans secured against the value of individuals’ residential, commercial and industrial properties.

 

 

  1. [3] MAS has waived the total debt servicing ratio for borrowers who take out mortgage equity withdrawal loans with loan-to-value limits of not more than 50%.

 

 

  1. [4] This payment deferment option is applicable for student loans not covered by the Government’s Student Loan Relief (i.e. non-MOE student loans). As part of the Government’s Resilience Budget announced on 26 March 2020, MOE will suspend the repayment and interest for Tuition Fee Loans, Study Loans and Overseas Student Programme Loans for all autonomous university and polytechnic graduates for 1 year, from 1 June 2020 to 31 May 2021.

 

 

  1. [5] These include loans taken to purchase residential, commercial and industrial properties, as well as mortgage equity withdrawal loans secured on these properties.

 

 

  1. [6] Borrowers are already not subject to TDSR, MSR and loan-to-value (LTV) limits when they refinance their loans for owner-occupied residential properties.

 

Resources

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