Household debt and mortgages in Singapore grew by 1% in last quarter of 2023

SINGAPORE: Figures released by the Department of Statistics (SingStat) on Monday (Feb 26) show that household debt and mortgages grew by one per cent compared to the same period in 2022.

This growth in household liabilities is a reversal of three-quarters of year-on-year decreases, SingStat showed in its Household Sector Balance Sheet for the Fourth Quarter of 2023.

The balance sheet provides data on the assets and liabilities held by households in Singapore for a specified period. Assets refer to the amount of wealth, such as financial and residential property assets, that a household owns.

Liabilities show their amount of debt, meaning mortgage and personal loans.

“Hence, household net worth refers to the difference between total assets and total liabilities and it provides an indication of households’ financial health,” SingStat explained, adding that for the fourth quarter of 2023, household net worth grew by 8.9 per cent year-on-year.

Read related: Singapore’s total household debt hits lowest level in a decade

SingStat noted that growth in assets and liabilities strengthened in the final quarter of last year, with growth in assets increasing from 6.8 per cent in the third quarter of 2023 to 8.0 per cent in the last quarter because of strengthening growth in financial and residential property assets.

The quarter also saw a one per cent growth in liabilities, largely due to a faster growth in mortgage loans and a slower pace of decline in personal loans.

Below are the Key Aggregates on the Household Sector Balance Sheet for each quarter of last year.

In late November, the annual Financial Stability Review report released by the Monetary Authority of Singapore (MAS) showed that the country’s total household debt reached its lowest point in a decade, at 1.2 times personal disposable income in the last quarter.

At that point, Singapore showed eight consecutive quarters of decline in household debt due to heightened caution from local households in acquiring additional loans, especially for personal loans.

The increase in interest rates during the second half of 2022 acted as a catalyst, causing Singaporeans to act more prudently when it came to loans.

The central bank suggested that the sustained growth of local income has played a pivotal role in contributing to the overall reduction in household debt.

However, the report warned against people growing complacent, underlining an increase in the maturity risk of short-term debt, particularly credit card debt, during the current year. /TISG

Read also: Median Household Income at S$10,869 in 2023; 2.8% real term increase from past year