Banks to follow standard deferment of more consumer loans: MAS

FROM May 6, individuals can soon seek to defer repayment across a wider swathe of loans - such as loans for industrial and commercial property, renovation, education and cars - the Monetary Authority of Singapore (MAS) and other industry bodies said late on Thursday.

Borrowers with industrial and commercial property loans can apply to their respective banks and financial institutions to defer their principal payments through to the end of this year. These requests will be granted as long as the loan repayments were current as at February 1, 2020.

Those with mortgage equity withdrawal loans granted on or after April 6, 2020 may ask to defer either principal repayments or both principal and interest payments. This will allow individuals to monetise the equity in their existing properties to meet business expenses and family needs, said the MAS in a statement.

Those with renovation loans and student loans not already covered by the Ministry of Education can also apply to defer both principal and interest payments.

Applications to defer these four types of loans will be provided on an opt-in basis and may be extended through to the end of this year. Applicants do not need to demonstrate any impact from Covid-19 to secure the deferment.

These guidelines are part of a second relief package guided by MAS and other industry bodies for individuals seeking support on their loan commitments. Early this month, the authorities had guided that all banks and finance companies here must allow deferments through to the end of the year of either principal repayments or both principal and interest payments of qualifying mortgages. 

The earlier set of support measures also give eligible consumers who suffered income losses the option to convert outstanding balances on personal unsecured credit to term loans.

As part of the second package, borrowers seeking relief from motor vehicle loans can soon approach their respective banks and financial institutions to discuss suitable repayment plans. Assessments will take into account the borrower's financial condition, need for the vehicle, current market value of the vehicle, and its estimated market value after deferment, the MAS said.

Eligible individuals on debt consolidation plans and are affected by the Covid-19 outbreak can seek to extend the loan tenure of their existing plans for up to five years, anytime from May 18 through the end of this year.

In addition, those with investment property loans can apply to refinance their loans without being subject to property borrowing curbs, namely the total debt servicing ratio (TDSR) and mortgage servicing ratio (MSR). Borrowers who do not meet TDSR and MSR are exempted from having to repay 3 per cent of their outstanding loan over three years.

This will allow property owners to refinance their loans to lower interest costs and debt obligations during this period, said the MAS.

Individuals whose incomes have taken a hit due to Covid-19 and are unable to meet the relevant minimum balances for their retail bank accounts can apply for a waiver of fall-below service fees, up to the end of this year. Similarly, those affected by the outbreak, who have set up automated payment deductions - such as for insurance premiums and utilities - can also apply to waive bank fees for failed deductions.

"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," said the MAS.

In response to the MAS announcement, OCBC said on Friday that individuals' applications for all types of secured and unsecured loans will now come under its Covid-19 relief programme.

To date, the bank has approved S$4 billion in repayment moratoriums to individuals, mostly for mortgages.

Since March, OCBC has received an increasing number of requests to defer monthly repayments for car, renovation, education, as well as industrial and commercial property loans - with the number of applications jumping by between 20 and 70 times for each type of loan. But as there were no standardised relief measures for these loans then, each request was handled individually. 

In a statement, Sunny Quek, OCBC's head of consumer financial services, said: "We expect the number of moratorium requests for other loan types to continue to increase over the next few weeks, as the tightened circuit breaker measures continue to financially impact more people."