Singapore stepped up efforts to contain a rapid increase in household debt by tightening rules around unsecured credit late Wednesday – a move viewed by economists as a preemptive strike ahead of a rise in borrowing costs in the country.
“The central bank is being pre-emptive. Taken together with the previous measures announced, including the Total Debt Servicing Ratio (TDSR) framework for property loans, they will likely be effective,” Michael Wan, economist at Credit Suisse told CNBC on Thursday, referring to a measure which caps monthly mortgage payments to 60 percent of a borrower’s monthly income.
Among the new rules on unsecured credit, the Monetary Authority of Singapore, the country’s central bank, requires banks to review a borrower’s total debt and credit limit before granting a new credit card.
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