Banks to allow temporary halt in payments for some loans

Individuals can choose to temporarily halt payments for education, renovation and motor vehicle loans, in a move by the Monetary Authority of Singapore (MAS) and the finance sector to ease cash flow concerns amid the coronavirus pandemic.

Those with commercial or industrial property loans, as well as mortgage equity withdrawal loans, can also apply to their banks to defer payments until the end of this year, subject to certain requirements.

Service fees that are typically charged for failing to maintain the minimum average daily or monthly balances in one’s retail bank account can also be waived till Dec 31.

The same goes for bank fees for failed Giro transactions set up to pay for insurance premiums and electricity bills, among others.

Applicants do not need to show that they have been affected by the Covid-19 crisis to obtain the relief, said the MAS. Their credit score will also not be affected.

The latest measures aim to support individuals facing financial difficulties due to the Covid-19 pandemic, said the MAS. It had previously rolled out a set of measures in March.

“This second package will extend the scope of relief for individuals to other types of loan commitments, and allow them to continue to have access to affordable basic banking services,” added the authority.

These include mortgage equity withdrawal loans granted on or after April 6, and education loans that are not covered by the Government’s student loan relief.

One may apply to defer either principal payment or both principal and interest payments on the loans until Dec 31.

Other relief measures announced yesterday by the MAS, together with the Association of Banks in Singapore and the Finance Houses Association of Singapore, include allowing applicants to extend the loan tenure for debt consolidation plans and to refinance investment property loans without being subject to the total debt servicing ratio and mortgage servicing ratio.

But even as MAS set out the measures, it warned that payment deferments and loan tenure extensions will result in higher overall interest costs. “Individuals should carefully consider the accumulated interest costs they eventually have to bear,” it added.

Applications for all the relief measures will start on Wednesday next week, except for the loan tenure extensions for debt consolidation plans, which will start on May 18.

OCBC Bank started receiving moratorium requests for car loans, renovation loans, education loans and industrial and commercial property loans in March.

The number of applications had jumped between 20 and 70 times within the past month for each of the loan types, the bank said, adding that eligible requests had been approved.

United Overseas Bank had received requests to defer payments on commercial and industrial loans.

DBS Bank had waived the fall-below fees for more than two million Singapore residents on their DBS or POSB accounts.

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