In recent years, Singapore has seen a significant rise in borrowing among its middle-aged population, particularly those aged 40 to 59. A report by loan matching platform Lendela reveals that this demographic is increasingly seeking loans to manage growing financial pressures, including daily expenses, medical bills, and mounting credit card debt. Over the past two years, loan applications from this age group have surged by an alarming 28%, with the average loan size now reaching S$22,000. This trend sheds light on a growing economic challenge for many Singaporeans as they struggle to cope with the rising cost of living.
Middle-Aged Singaporeans Are Borrowing More
Lendela’s report highlights that middle-aged individuals now make up roughly one-third of all loan applications. This shift reflects a critical need for financial assistance within this age group, as older Singaporeans are increasingly burdened by economic challenges. In contrast, younger borrowers aged 18 to 29, who make up just over a quarter of applications, have seen a 25% decline in loan activity since 2022. The data suggests that financial insecurity is becoming a more pronounced issue among older Singaporeans, as many grapple with stagnant wages and escalating costs.
The report, based on nearly 200,000 loan applications, indicates that the majority of this increase is driven by individuals earning above the median wage, which stood at S$62,000 in 2023. Notably, loan applications from middle-income earners, those making between S$48,000 and S$84,000 annually, surged by 35%. High-income earners, defined as those earning more than S$84,000 per year, saw a staggering 64% increase in loan applications. These figures highlight the financial strain felt even by those earning well above the national median, as cost-of-living pressures continue to mount.
Financial Strain and Debt Management
One of the key findings from Lendela’s report is the growing reliance on loans to manage living costs and consolidate debt. According to Bryan Tay, Lendela’s country manager, many Singaporeans are borrowing primarily for everyday expenses and debt management, which includes recurring bills and the consolidation of existing debt. The data reveals that 20% of all cost-of-living loan applications exceed S$20,000, illustrating the depth of the financial struggles faced by many households.
Additionally, there has been a 25% rise in the number of borrowers with pre-existing debts, while individuals with debts exceeding S$50,000 saw a shocking 56% increase between June 2022 and June 2024. This highlights the escalating financial burdens for many Singaporeans as they face challenges such as inflation, rising medical costs, and stagnant wages.
Government Response and Public Discourse
Rising living costs have been a hot topic in Singapore, sparking public debate and parliamentary discussions. In a noteworthy seven-hour debate, a motion on the cost of living was passed, featuring amendments from the ruling People’s Action Party. This reflects the urgency of addressing economic concerns that have gripped many Singaporeans, especially the middle-aged demographic.
A recent survey conducted by the Institute of Policy Studies and CNA in April 2024 found that an overwhelming 90% of young Singaporeans aged 21 to 39 felt personally impacted by rising costs. These concerns echo across age groups, making financial relief a pressing issue for many households.
In response to the economic strain, the Singapore government has introduced measures aimed at alleviating some of the financial pressure. In August 2024, the Ministry of Finance announced one-off cash payments for 2.4 million eligible adults. These payments, ranging from S$200 to S$400, were designed to ease the financial strain caused by inflation and rising living expenses. While these measures provide some relief, the continued rise in loan applications indicates that for many, the situation remains challenging.
Shifting Borrowing Trends: A Focus on Living Costs
The reasons behind the surge in loan applications paint a clear picture of the financial challenges faced by many Singaporeans. Four of the six most common reasons for borrowing are directly related to living expenses, according to Lendela. These include debt consolidation (30.8%), payment of bills (13.7%), home and household expenses (8.2%), and credit card debt (8%). Additionally, loans for home renovations and business-related expenses account for 6.3% and 5.1% of applications, respectively.
While retirees above the age of 60 represent only 3% of all loan applications, their participation has surged by 50% since 2022. This highlights that financial pressures are also affecting older Singaporeans, many of whom may face unexpected medical costs or reduced income after retirement. On the other hand, the share of borrowers in their 30s has seen a slight decline, dropping from just under 40% to 37.6%.
Conclusion: Navigating Financial Uncertainty
The rise in loan applications among middle-aged Singaporeans underscores the growing economic pressure many individuals face. With the cost of living continuing to rise, many are turning to loans to manage their financial burdens, from daily expenses to consolidating debt. The data suggests a broader trend of financial insecurity that could have long-term implications for the country’s middle-aged population.
As the Singaporean government continues to explore policy reforms and financial relief measures, it remains essential for individuals to stay informed and proactive in managing their personal finances. With the right strategies and resources, Singaporeans can navigate these uncertain times and build a more secure financial future.
