Source : Channel NewsAsia - 6 Feb 2009
The Housing and Development Board (HDB) will temporarily reduce or defer loan repayments for up to six months to help households affected by the current recession.
National Development Minister Mah Bow Tan, speaking during the debate on his ministry’s budget estimates in Parliament, said this move aims to help homeowners who have had their incomes affected by retrenchments or pay cuts.
“This gives them time to make adjustments to their lifestyles and consider longer-term options,” he said.
“However, reducing the loan repayment cannot be a solution in itself, especially in cases where the poor financial situation is likely to persist.
“The longer we stretch the reduced repayments, the more the interest accumulates,” he added.
Mr Mah warned that households could also be lulled into a false sense of financial security because of this.
He pointed out that HDB allowed very long periods of reduced repayments during the last economic downturn in 2003 and 2004.
Because of this, there are now 6,500 households in arrears.
Mr Mah said: “So we’ve got 6,500 households who are owing arrears for more than two years. Some of them are owing three years, four years. We had hoped by giving them more time, they would be better able to resolve their financial problems. Instead, they remain unable to service their loans and they are not nearer to a sustainable solution. In fact their circumstances have worsened significantly and their arrears have gone up.”
That is why instead of providing short-term relief to its arrears cases, HDB now helps them find longer-term sustainable solutions to their problems, said Mr Mah.
To do this, affected households must be prepared to make tough adjustments and these include subletting a room or even the whole flat.
Homeowners can also consider downgrading their flats to help them get through these difficult times, said Mr Mah.
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