How to Handle Mortgage Stress and Reduce Debt

Increasing interest rates are causing mortgage stress among Singaporeans. Here’s what can you do to mitigate your financial difficulties.

ValueChampion Editorial Team

by ValueChampion Editorial Team on Mar 17, 2024

mortgage housing home ownership

If you own a house, there’s likely one question on your mind: Are housing loan interest rates on the rise or falling in Singapore?

Based on the risk exposure to prolonged high global interest rates, the Monetary Authority of Singapore’s Financial Stability Review Report from November 2023 suggests that more Singaporean households may encounter increased mortgage rates in 2024.  Ongoing economic uncertainties and increasing costs are likely to hinder Singapore banks from lowering their home loan rates in 2024, despite the expected interest rate reductions by the US Federal Reserve this year.

If this is the reality, the potential for unchanged or an increase in housing loan rates could trigger mortgage debt stress among homeowners and buyers here, especially for those with less disposable income.

This article explores how to manage mortgage stress for better financial health amidst the uncertain interest rate environment in Singapore.

Related: Best Home Mortgage Loan Refinancing

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How Long Will Mortgage Stress Last?

house keys
Source: Unsplash

Based on the findings below from local newspaper publications, it appears that housing loan rates in Singapore may not decrease significantly in 2024. Two factors play a role in this:

Economic Uncertainty

Economic experts expect a slowdown in the global economy this year, without reaching a recession. Based on Today Online, The International Monetary Fund foresees a dip in global growth from 3% in 2023 to 2.9% in 2024. Pierre-Olivier Gourinchas, the IMF’s economic counsellor, pointed out that despite challenges like energy and food market disruptions and global monetary tightening to combat inflation, the global economy continues to grow slowly. He described the current global economic state as “limping, not sprinting.”

Rising Costs

According to the Business Times, despite potential adjustments to the Federal Reserve’s rates in the U.S., it’s anticipated that Singapore banks may not follow suit in cutting mortgage rates due to the rising costs and economic landscape. For instance, in 2023, inflation rates were influenced by the rise in the GST (goods and services tax) rate to eight per cent.

Ways To Handle Mortgage Stress or Reduce/Consolidate Debt

house fund
Source: Unsplash

If you don’t want to get caught in mortgage debt stress or be held hostage by the rising housing cost in Singapore, these four tips may offer you peace of mind:

Borrow Within Your Means

Not only should you borrow less but also borrow within your affordable limits. Some homebuyers attempt to overstretch their financial commitment in the view that they will get a raise to cover for the shortfall in future, however this is a risky strategy, especially in the current financial climate.

Always use a mortgage loan calculator to find the best home loan rates in Singapore before committing to buying a property. Such calculators offer housing loan options and monthly repayment estimates so that you can make an informed decision.

Set Aside a Reserve Fund

Try to set aside a reserve sum of S$20,000 to S$50,000 in CPF or in cash as a safety net. The amount largely depends on the value of your monthly mortgage repayment but it should be enough to cover at least six months of the repayment.

Such a fund serves as a buffer should you get retrenched or decide to take a break from work. In a worst-case scenario, the six-month period will be enough to let you sell your property or rent it out for passive income.

Extend Home Loan Tenure for Lower Monthly Payments

Most people want to pay off their loans as fast as possible. But if you are experiencing mortgage stress, there is no harm in extending the loan tenure to give you some breathing space.

However, do note that the maximum loan tenure for housing loans is capped at 30 years for HDB flats and 35 years for private properties. If you intend to take up a loan from HDB to buy a new flat, the maximum loan tenure is only 25 years.

Debt Consolidation to Streamline Your Finances

If you have several high-interest loans and are finding it hard to meet all the repayments on time, debt consolidation may be a viable strategy to off multiple debts with a new personal loan and at a lower interest rate.

Interestingly, debt consolidation may improve your credit score as well. Even though applying for a new loan for debt consolidation may cause a temporary dip in your credit score, because you’re paying off revolving lines of credit, your score can improve soon after.


Don’t let mortgage stress or the rising home loan rates in Singapore get the better of you. Even though there is no clear sign of when housing loan rates will calm down to more affordable levels, many banks have measures in place to help existing homeowners manage their home loan repayments in the event of unexpected financial difficulties.

If you’re in the market looking to buy a new property, you’ll be wise to take a more prudent approach or seek the help of a financial advisor before signing on the dotted line.

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