Singapore banks warned against spiking global rates

Credit quality deterioration looms.

According to a report by Bloomberg, Singapore’s central bank warned that rising global interest rates could weigh on household and corporate debt and pose risks for banks in the city-state.

A 3 percent increase in mortgage rates would boost the share of overly indebted households to as much as 15 percent from 10 percent now, the Monetary Authority of Singapore said in its annual financial stability review today.

Banks also need to guard against credit quality deterioration as rates increase after Singaporean companies’ median debt-to-equity ratio rose to 39 percent at the end of June, the authority said.

Read full report here.