Homeowners will soon be able to apply to their banks to defer repayments of property loans until 31 December this year, as part of the measures unveiled by the Monetary Authority of Singapore (MAS), in partnership with the financial sector, to help ease the financial burden brought about by COVID-19.

With the Singapore economy anticipated to remain weak beyond the first half of this year, MAS expects many individuals and SMEs in Singapore to “continue to face challenges in managing their cash flows and meeting their financial obligations, such as loan repayments and insurance premiums” in the months ahead.

For the new measures, MAS worked with the Finance Houses Association of Singapore (FHAS), the Association of Banks in Singapore (ABS), the General Insurance Association (GIA) and the Life Insurance Association (LIA).

The option to defer repayments of property loans applies to either the principal payment or both the interest and principal payments, reported CNA.

Interest will only accrue on the deferred principal amount – which means that the deferred interest payments will not be charged any interest, explained MAS.

Lenders will approve the deferment request if the individual is not in arrears for over 90 days as at 6 April. MAS noted that applicants need not show that they have been affected by COVID-19 to obtain deferment.

Those with life and health insurance can also apply for a deferment of their premium payments for up to six months, with the insurance coverage still maintained during the period.

Premium deferment is available for all individual health and life insurance policies with a policy renewal or premium due date of between 1 April and 30 September.

According to MAS, general insurance policy holders can also apply for instalment payment plans, while maintaining protection.

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Those with unsecured loans can also apply for a conversion of their outstanding balances to term loans with reduced interest rate, which is capped at 8%.

The figure is way lower than the 26% usually charged on credit cards.

Meanwhile, small and medium-sized enterprises (SMEs) facing temporary cash flow issues can apply to defer principal payments on their respective secured term loans up to 31 December, subject to banks and finance companies’ assessment.

MAS pointed that only SMEs that continue to pay interest and are in good standing with finance companies and banks can avail of the relief.

Finance companies and banks can also apply for low-cost funding via a new MAS-Sing dollar facility for loans that have been granted under the Temporary Bridging Loan Programme and SME Working Capital Loan scheme of Enterprise Singapore.

Finance companies and banks may apply for these funds until end-December, provided they commit to passing on the funding cost savings to their SME borrowers.

“Deferring payments increases future obligations and hence borrowers and policyholders should weigh their options carefully,” said MAS.

MAS Managing Director Ravi Menon shared that the new measures will complement the broader fiscal initiatives of the government while helping the “Singapore economy recover more quickly emerge stronger when the pandemic passes”.

He added that the measures are possible due to financial institutions having “strong starting position” with ample liquidity, deep capital buffers and low leverage.

“They are well-placed to not only ride out the economic storm caused by COVID-19, but also provide meaningful relief to individuals and SMEs affected by the crisis,” he said.

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