Report: Spike in loan requests from Singaporeans aged 40-59 to cope with cost-of-living challenges

SINGAPORE, Aug 14 — Over the past two years, a sharply higher proportion of middle-aged people here have sought loans to deal with cost-of-living pressures like household spending, medical expenses and credit card debt.

The trend was identified in data provided by loan matching platform Lendela, which matches people seeking loans with various bank and licensed non-bank lenders in Singapore.

According to a report issued on August 8, the share of loan applications from the middle-aged population (40 to 59 years old) has risen by as much as 28 per cent in the last two years. The average loan size for this group was S$22,000 (RM73,944).

This group accounts for about one-third of loan applications today.

Young borrowers aged 18 to 29 account for over a quarter of applications to date, though their share of applications fell as much as 25 per cent since 2022.

While it did not provide absolute figures, citing commercial sensitivities, a Lendela spokesperson said that its figures were based on close to 200,000 applications from Singaporeans and permanent residents that the platform gathered from 2022 to 2024.

The spokesperson also said its data tracked loan applications, not loan disbursements, and there was a “slight difference” between these numbers.

Bryan Tay, the platform’s Singapore country manager, said they have seen a “gradual but consistent increase in loan applications” mainly among middle-aged Singaporeans and borrowers making above the median wage — which was around S$62,000 in 2023.

Indeed, the report also indicated a 35 per cent jump in the share of applications from middle-income borrowers — those who earn between S$48,000 and S$84,000 annually.

Similarly, there was a 64 per cent rise in the share of applications from mid to high income borrowers — those who earn above S$84,000 a year.

“On closer look, we see that this uptick has its roots in rising costs, as the majority of the most common reasons for borrowing have been associated with living costs and debt — such as recurring bills, debt consolidation, and existing credit facilities,” said Tay.

The Lendela spokesperson added that the firm was able to ascertain these reasons as borrowers are required to state the purpose for their loans at any bank or licensed lender.

Why it matters

According to Lendela’s report, a fifth of all cost-of-living loan applications are for sums over S$20,000.

The share of cost-of-living borrowers with existing debts jumped by 25 per cent from June 2022 to June 2024. The share of those with large debts over S$50,000 shot up by 56 per cent in the same period.

This suggests a “growing need for help with managing large expenses and debts among Singaporeans amid a cost crunch”, said Tay.

But concerns over rising costs are not new, and have been part of the public discourse in Singapore in recent years.

A motion on the cost of living tabled by the Workers’ Party in November last year was debated in Parliament for more than seven hours before being passed with three significant amendments from the People’s Action Party.

In April 2024, a joint survey by the Institute of Policy Studies and CNA found that nine in 10 young Singaporeans aged 21 to 39 felt personally affected by the rising cost of living.

As part of the Government’s measures to help Singaporeans with these concerns, the Ministry of Finance announced yesterday that 2.4 million eligible Singaporean adults will receive a one-off cash payment of between S$200 to S$400 in September.

Why people borrow

The report found that four out of six of the most common reasons for borrowing are associated with living costs.

They are:

• Debt consolidation (30.8 per cent)
• Bills (13.7 per cent)
• Home and household expenditure (8.2 per cent)
• Credit card debt (8 per cent)

Borrowing for renovation and business-related expenses made up 6.3 per cent and 5.1 per cent of all loan applications respectively.

The report also found that while retirees above 60 account for only 3 per cent of applications today, there has been a 50 per cent jump in loan applications for this group since 2022.

On the other hand, there was a slight decline in the share of borrowers in their 30s, dropping from just under 40 per cent to 37.6 per cent. — TODAY