Household debt up, but financial assets grow at faster pace

The debt of households in Singapore may have risen in the past year, but their financial assets such as cash and stocks grew at a faster pace, so they can withstand pressures, said the central bank.

- Claire Huang

This is because income growth has been healthy and has outpaced debt accumulation, the Monetary Authority of Singapore (MAS) said in its annual financial stability review on Nov 27.

Household debt in the third quarter of 2024 was up by 3.6 per cent year on year, with mortgage loans the key contributor.

About 75 per cent of household debt comprised housing loans backed by property collateral.

Aggregate household net wealth grew in the first six months of 2024, rising by about 9 per cent year on year to nearly $3 trillion in the third quarter.

Liquid assets like cash and deposits continued to exceed total liabilities. They made up about 20 per cent of total assets as at the third quarter of 2024, the report said.

In fact, household debt fell to 1.1 times personal disposable income, or after-tax income, in the third quarter. The figure is less than the 15-year historical average of 1.4 times, and has declined for the 12th straight quarter, MAS said.

It noted that mortgage rates, or the interest paid as part of a monthly home loan, have declined, so Singapore households' ability to service their debts remained strong, especially as income growth has been stable.