New loan applications have declined as consumers are about taking on additional liabilities due to economic uncertainty.
The negative impact Covid-19 is having on Singapore's economy is expected to lead to a declining retail loans market in 2020, according to estimates by data and analytics company GlobalData.
The volume of outstanding retail loans is expected to decline by 2.5 percent this year to reach S$315.8 billion ($234.9 billion) in 2020, compared to a forecast of 2.2 percent growth before the pandemic hit.
Shivani Gupta, senior banking and payment analyst at GlobalData, noted that government measures such as deferral loan repayments and reduced interest rates will help consumers manage existing loans. However, that may not be enough to encourage consumers to take additional loans in the short-term, he said.
Less Mortgages
Mortgage loans accounted for three-quarters of consumer loans in Singapore in 2019. However, strict social distancing rules and other lockdown measures to limit the spread of Covid-19 have affected the country’s real estate market, which in turn resulted in the drop of new mortgage applications.
According to data from property consultancy Knight Frank, the sale of prime non-landed residential units in the first half of 2020 amounted to S$659.2 million – a drop of 52.9 percent from the S$1.4 billion in the previous half-year.
The landed residential market was also affected, with a total of 106 landed homes totaling S$1 billion exchanging hands, a drop of 23.1 percent from the S$1.3 billion transacted in the second half of 2019, constituting 125 units.
