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A high unemployment rate is bad news for Singapore’s banks: analysts
Only 5,500 jobs were created in 2Q.
While Singapore banks’ mortgage quality may be resilient to housing downturns, analysts say they’re only as stable as the city-state’s unemployment rate allows them to be.
According to a report by Fitch Ratings, mortgage quality should stay resilient as long as the unemployment rate stays low.
“History tells us that owner-occupied borrowers usually default on their home loans a last resort,” the report noted.
Meanwhile, the report added that this is supported by the close-to-90% correlation between unemployment and housing NPLs using data between 2001 and 2015.
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