[SINGAPORE] Singaporean households have been steadily increasing their debt levels, with liabilities rising 5.2% year-on-year to S$384.1 billion in Q1 2025 — marking six consecutive quarters of growth. According to NUS professor Qian Wenlan, borrowing for major purchases like homes can be financially sensible, but she cautions against signs of strain, such as rising bad debts or bankruptcies. Importantly, household assets have grown even faster, up 7.8% to S$3.49 trillion, keeping the liabilities-to-assets ratio low at 11%, a level that has trended downward over the past decade.
Liquid assets, such as cash and deposits, have also expanded, reaching S$670.1 billion and comfortably covering total liabilities. As a result, household net worth remains solid, increasing by 8.1% year-on-year to S$3.1 trillion, despite slightly slower growth compared to the previous quarter. Notably, Singapore households have not faced a negative net worth situation in the past two decades, even during the 2008–2009 financial crisis. Additionally, personal disposable income rose by 5.2% to S$93.3 billion, suggesting households have more spending power without needing to tap into debt or assets.
Looking ahead, falling interest rates should offer relief to borrowers. The Singapore Overnight Rate Average (SORA) has declined from about 2.8–3% earlier this year to around 2.2–2.28%, reducing monthly debt repayments, especially on home loans — which make up nearly 73% of household liabilities. Economists also highlight a resilient macroeconomic outlook despite global trade tensions, as public spending and accommodative monetary policy are expected to support modest GDP growth of around 1.3% in 2025.
Implications for Businesses, Consumers, and Policy
For businesses, rising household assets and incomes point to continued consumer spending potential, especially in sectors tied to housing, retail, and financial services. Companies that offer discretionary goods, home-related products, or personal financial services can tap into this financially secure base, particularly as lower interest rates free up additional household cash flow. However, firms should stay alert to signs of consumer over-leverage, which could dampen spending if economic conditions shift.
Consumers stand to benefit directly from easing debt burdens thanks to falling borrowing costs. Lower monthly mortgage payments may allow families to redirect funds towards savings, investments, or consumption, improving overall financial flexibility. Still, consumers should remain cautious, as even with favorable conditions, the long-term sustainability of their debt levels hinges on stable incomes and continued economic growth.
For policymakers, the data presents a mixed picture: while household finances appear robust, continued monitoring is essential to prevent hidden risks. Regulators may want to ensure that financial institutions maintain prudent lending practices, particularly as low interest rates can sometimes fuel excessive borrowing. Additionally, policy measures that support income growth and asset accumulation — such as skills development, retirement savings incentives, or affordable housing initiatives — can further bolster household resilience.
What We Think
The steady rise in household liabilities in Singapore is not, by itself, cause for alarm — especially given the stronger growth in assets and net worth. “Debt, when balanced by rising assets and income, can be a healthy enabler of long-term goals,” as Professor Qian’s comments suggest. Still, the picture is nuanced: while the average household appears well-positioned, there may be pockets of vulnerability among lower-income or heavily leveraged segments.
We believe businesses should be proactive in understanding consumer sentiment and financial health, rather than assuming across-the-board spending strength. Financial institutions, in particular, have an opportunity to engage in more personalized, responsible lending that supports customer needs without encouraging unsustainable debt.
On the policy side, the combination of accommodative monetary policy and public spending is a timely cushion, but vigilance is needed to ensure it does not create future imbalances. Singapore’s long track record of financial prudence has helped it weather past downturns, and maintaining this balance will be key as the global landscape evolves.
Ultimately, the data points to a cautiously optimistic environment: households are borrowing, but they’re also growing wealth and income. The coming quarters will test whether this balance holds — and whether households, businesses, and policymakers can navigate the next phase with the same resilience.
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