Individuals can apply to defer property loan, insurance premium payments amid COVID-19: MAS

SINGAPORE: Home owners facing financial pressure amid the COVID-19 outbreak will soon be able to apply to defer repayments for their residential property loans until Dec 31 this year.

This option applies to either the principal payment, or both the principal and interest payments. Interest will accrue only on the deferred principal amount, which means that no interest will be charged on the deferred interest payments, said the Monetary Authority of Singapore (MAS) on Tuesday (Mar 31).

Lenders will approve the request for deferment as long as the individual is not in arrears for more than 90 days as at Apr 6. Applicants do not need to show any impact from COVID-19 to obtain the deferment, it added.

This is among a slew of measures announced by the MAS, in partnership with the financial industry, to help ease the financial strain faced by individuals due to the COVID-19 pandemic.

Small and medium-sized enterprises (SMEs) also stand to benefit, with the measures supporting them with continued access to bank credit and insurance cover.

Deputy Prime Minister Heng Swee Keat, while announcing the Resilience Budget last Thursday, had said that the MAS is working with banks and insurers to see how best to help businesses and individuals with loan obligations and insurance premium payments.

Amid uncertainties caused by the coronavirus pandemic around the world and expectations that the Singapore economy will remain weak beyond the first half of 2020, MAS said “many individuals and SMEs in Singapore will 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.

“MAS and the financial industry have collaborated on a package of measures to help individuals and SMEs facing temporary cash flow difficulties to ride through the storm,” it said in its media release.

READ: COVID-19 Resilience Budget – ‘Landmark’ S$48 billion package to tide Singapore through ‘unprecedented’ crisis

“The relief for individuals and SMEs will be provided on an opt-in basis, as their cashflow circumstances will differ.

“Deferring payments increases future obligations and hence borrowers and policyholders should weigh their options carefully,” it added, noting that financial institutions will “process all applications expeditiously”.

HELP FOR INDIVIDUALS

Other measures include allowing individuals with life and health insurance to defer premium payments for up to six months.

Insurance coverage will be maintained during this period of deferment, MAS said.

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

General insurance policy holders will also be able to apply for installment payment plans, while maintaining insurance protection, MAS said.

There will also be the option for those with unsecured loans to apply to convert their outstanding balances into term loans at a reduced interest rate, capped at 8 per cent.

This is much lower than the 26 per cent typically charged on credit cards.

The term of the converted loan can be up to five years, depending on the individual’s ability to meet the minimum monthly repayment, MAS said.

MAS noted that this option is available to all individuals who have suffered a loss of 25 per cent or more of their monthly income after Feb 1, and are “at risk of incurring substantial arrears”.

Individuals may apply to their lenders for this conversion from Apr 6 until Dec 31 this year.

HELP FOR SMES

For SMEs that may be facing temporary cash flow constraints, they will have options to defer principal payments on their secured term loans up to Dec 31, subject to the assessment of the banks and finance companies.

They will also be able to extend the tenure of their loans by up to the corresponding principal deferment period.

This will be available to SMEs that continue to pay interest and are in good standing with their banks and finance companies, MAS said, adding that more than S$40 billion of existing loan facilities to SMEs is estimated to qualify for this opt-in relief scheme.

To ensure lower interest on SME loans, banks and finance companies may apply for low-cost funding through a new MAS-Sing dollar facility for loans granted under Enterprise Singapore’s SME Working Capital Loan scheme and the Temporary Bridging Loan Programme.

Banks and finance companies can apply for these funds until end-December, “provided they commit to pass on the savings in funding cost to their SME borrowers”.

There is also assistance with insurance premium payments for SMEs.

MAS said corporates, including SMEs, holding general insurance policies that protect their business and property risks may apply to their insurer for instalment payment plans. 

COMPLEMENT GOVERNMENT’S FISCAL MEASURES: MAS

MAS managing director Ravi Menon said the newly announced measures will “complement the Government’s broader fiscal initiatives and help the Singapore economy recover more quickly and emerge stronger when the pandemic passes”.

These measures are possible due to financial institutions here having a “strong starting position” with deep capital buffers, ample liquidity, and low leverage, Mr Menon added.

“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.”

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

ABS chairman Samuel Tsien said banks have the social responsibility to help affected customers and have already introduced targeted financial relief programmes for those impacted.

“But we are now doing more as an industry,” said Mr Tsien, who is also chief executive of OCBC. “The measures are broad-based and standardised, to provide prompt and direct relief to affected individuals and businesses, particularly SMEs.”

LIA president Khor Hock Seng said: “In addition to the usual options available to keep individual policies going, we are giving customers who need help more time to pay premiums that are due to ensure that their insurance protection remains uninterrupted during this difficult period.”

BOOKMARK THIS: Our comprehensive coverage of the novel coronavirus and its developments

Download our app or subscribe to our Telegram channel for the latest updates on the coronavirus outbreak: https://cna.asia/telegram