"Banks with large property loan portfolios will face higher risks when interest rates start to rise -- this as highly-leveraged households begin to have difficulty paying their mortgages. Economists said this could lead to credit tightening by banks, and a hard landing for the property sector. According to a recent Goldman Sachs report, for the period from 2005 to 2012, household debt in Singapore grew by 63 per cent, outpacing the average household income growth of 57 per cent. Irvin Seah, a senior economist with DBS Bank, said: "Among Asian economies, Singapore and Hong Kong will be the most vulnerable to an interest rates hike because of the rapid increase in leverage ratios over the last few years (in) a low interest rate environment. "However, the property prices in these countries have run up quite significantly compared to the rest." "
Posted on: Tue, 10 Sep 2013 07:14:25 +0000