Home loans rising, but no sign of financial stress seen

Household assets have increased even as total liabilities have grown, say analysts

- Chor Khieng Yuit

Households in Singapore are taking on more loans for their properties, the latest data shows, but the increase is not raising red flags for market watchers yet.

There is no sign yet that the average family here has overstretched their finances, say the analysts.

Mortgage loans grew at a faster pace of 5.2 per cent year on year in the second quarter to $284.3 billion, according to household balance sheet numbers from the Department of Statistics (SingStat) released recently.

This followed a robust 4 per cent growth in the first quarter, also a faster pace of growth than the 3.1 per cent increase in the fourth quarter of 2024.

Home loan growth averaged 2 plus per cent growth over 2023 and the first half of 2024 before edging up to 3 per cent in the third quarter of 2024, and it has been accelerating steadily since.

Ms Lee Yen Nee, senior country risk analyst at BMI, a unit of Fitch Group, said that while mortgage loans have continued to increase in absolute terms, they have remained stable and below historical peaks as a share of personal disposable income.

Mortgage loans as a share of personal disposable income is a measure of household financial burden.

A higher ratio indicates potentially greater financial strain as a relatively larger proportion of a household’s take-home pay is tied to the mortgage.

In the second quarter of 2025, this metric rose to 80.3 per cent, from 79.5 per cent in the first quarter.

That is still an improvement from 2022, when the metric was in the 90 per cent to 93 per cent range; and 2023 when it was in the 83 per cent to 86 per cent range.

Home loan is the biggest debt for the typical Singapore family.

SingStat stated on its website that mortgage loans have accounted for at least 70 per cent of household liabilities since the first quarter of 1999.