A third of Singaporeans facing difficulty in home loan repayments: poll

COVID-19 has put a strain on Singaporeans' financial health, impacting their ability to pay their housing loans and dragging down their passive income, according to the latest survey by OCBC.

The OCBC Financial Wellness Index, which launched in 2019, has dipped to 61 this year, down from 63, on the back of the pandemic fallout and the resulting global economic slowdown.

A total of 2,000 working adults in Singapore between the ages of 21 and 65 were surveyed online between Sept 2 and Oct 3 this year.

About a third of respondents (31 per cent) had issues paying off their housing loans, with 9 per cent indicating that they may be forced to sell off or downgrade, the survey found.

The survey did not ask if respondents had deferred their home loan repayments, as part of moratoriums offered by banks as part of Covid-19 relief.

Singaporeans' passive income was also negatively impacted by the weakening economy, mostly due to the poor performance of dividends, which is the main source of passive income. The index score on this front fell from 42 last year to 28. After dividends, the other top sources of passive income are interest income and rental income.

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Despite the pressure on financial health, Singaporeans are still saving more to cope with potential contingencies (index score of 92 this year compared with 87 previously), with about 28 per cent of income saved each month.

Millennials stood out among the age groups for having the most financial worries - 49 per cent of them are concerned about money, compared with 37 per cent for Gen X and 26 per cent for baby boomers.

Those in the age group, however, are driven to start investing earlier compared to their predecessors due to a desire to grow wealth fast, according to OCBC.

About 42 per cent say they do not know the best way to grow their money, but millennials are the most likely to do their own research before making financial decisions.

Only about a quarter of them seek professional advice when making investment decisions, while 39 per cent of millennial investors say they speculate excessively to make quick gains.

Another finding from the OCBC survey was the discrepancy in financial goals between Singaporean women and mothers.

For Singapore women, growing their own wealth was the top financial priority (51 per cent), followed by a tie between retirement planning and taking care of loved ones financially at 47 per cent.

For mothers, the top priority was taking care of loved ones financially at 56 per cent, followed by planning for their retirement at 46 per cent, and growing their wealth came in last at 40 per cent.

While the survey found that more women than men believe that they do not know how to grow their money, those who said that they are confident and knowledgeable in making investments actually earned a higher rate of return than men.

Overall, OCBC found that Singaporeans are still not prepared for retirement, with 75 per cent not on track with their retirement planning.

The majority of respondents underestimate the retirement amount needed on their ideal retirement lifestyle by an average of 32 per cent.

OCBC's head of wealth management Singapore Tan Siew Lee said: "From the OCBC Financial Wellness Index 2019 and 2020, the message was clear - Singaporeans don't have a good understanding of their overall financial situation and of their projected financial needs when they retire."

As such, the bank has enhanced its OCBC Life Goals financial planning portal to help Singaporeans plan for longer-term goals like retirement. It will also be conducting a masterclass for women conducted by Ms Tan to build their confidence in investing.

Koh Ching Ching, OCBC's head of group brand and communications said: "We had hoped that the Index would improve from 2019 or remain the same, but the financial impact of Covid-19 on Singaporeans was undoubtedly reflected in the drop in the Index."

But she noted that Singaporeans are becoming more prudent and saving regularly, while setting aside emergency funds.

"If these habits stick and lessons are learned from the crisis, as Singapore and the region recovers from the pandemic, we expect to see a rise in the Index next year - perhaps even surpassing 2019's result," she said.