Chart of the Day: NPL ratio for housing to stay within 0.4%-0.5% in 2020-21

Mortgage rates are not expected to rise in the near future.

This chart from Fitch Ratings shows that the housing nonperforming loan (NPL) ratio is tipped to edge up but stay low at 0.4%-0.5% in 2020-2021, as household debt to income ratio improves.

Also read: Home prices growth tipped to remain at 2% in 2020-2021

Mortgage performance is also expected to be supported by low unemployment of about 2% in 2020 and 2021. “Fitch Ratings does not expect an increase of mortgage rates in the near future, which would support borrowers’ ability to pay and stable loan performance,” the report stated.

Mortgage rates rose to 2% at the end of H1 2019 due to a sharp rise in the benchmark rates. However, Singapore’s benchmark rate began to decline following the US’s rate cut in mid-2019.