Consumers in their 20s have been taking on increasing amounts of personal debts as the impact of the COVID-19 pandemic continues to hit, Credit Bureau Singapore (CBS) data revealed on Monday (16 Aug).
According to the data, the average personal loans and overdraft balances for those under 30 increased by about 23 per cent in the first quarter of this year compared to the last three months of last year.
CBS noted that the average personal loan and overdraft balances for borrowers from 21 to 29 years old rose to S$49,689 in the first quarter of this year, which is about 42 per cent higher than the average of S$34,941 in the first quarter of last year.
Borrowing limits in Singapore were capped in 2015 to help borrowers avoid accumulating excessive unsecured debts.
The data also showed that for those under 30 years old, the personal loan delinquency rate – refers to the percentage of borrowers with payments 30 days or more overdue – climbed 13.4 per cent in the first quarter of this year compared to the previous three months.
In addition, the overdraft delinquency rate increased by 12.8 per cent in the same period.
CBS executive director William Lim highlighted that there was an increase in credit consumption for mortgage loans, personal loans, and overdrafts from the younger segment in the first quarter of this year.
“We believe it could be attributed to them being more active again following the pandemic-strained 2020 and possibly the higher property prices,” he remarked.
While it was noted that mortgage debt among young adults was 2.6 per cent higher in the first quarter of this year than in the last three months of last year, the average credit card spending dropped 5.6 per cent over the same period.
Netizens speculating S’pore young adults’ spending habits during pandemic
Penning their thoughts under the comments section of The Straits Times’ Facebook post, netizens speculated the spending habits of young adults in Singapore during the pandemic, noting that most young people are spending money on food deliveries and online shopping.
“It’s not just how much you earn, but also how much you spend. It’s crazy seeing the amount people are spending on deliveries, bbt, app store… all totally unnecessary spendings.. then complain about having no savings (or in debt),” said one netizen.
A couple of netizens implied that people are taking personal loans because of the low salaries in Singapore.