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A high unemployment rate is bad news for Singapore’s banks: analysts

Singapore Business Review

Only 5,500 jobs were created in 2Q.

While Singapore banks’ mortgage quality may be resilient to housing downturns, analysts say they’re only as stable as the city-state’s unemployment rate allows them to be.

According to a report by Fitch Ratings, mortgage quality should stay resilient as long as the unemployment rate stays low.

“History tells us that owner-occupied borrowers usually default on their home loans a last resort,” the report noted.

Meanwhile, the report added that this is supported by the close-to-90% correlation between unemployment and housing NPLs using data between 2001 and 2015.



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