Lending rates hit record low

Singapore’s benchmark lending rates are being pushed down to record lows by global funds looking for a place to park.

Analysts said the so-called hot money, or unproductive funds, have been pouring into the country since the US Federal Reserve said it would keep its interest rates near zero for the next two years.

They said much of speculative money is destined for Singapore property.

The Singapore Interbank Offered Rate (Sibor) dropped to fresh historic low on Wednesday at 0.34709 per cent, having chalked up successive falls since July.

Sibor is the rate banks charge one another for short-term loans, and is used as a benchmark for retail mortgages.

The hot money is coming from international investors seeking the protection of Singapore’s triple-A credit rating, amid increased volatility in the US and Europe.

Analysts said limitations on Singapore-dollar investments make the property market an attractive destination.

Earlier this month, property developer Heeton Holdings said in a press release that more than half of its district 9 condominium launch close to Orchard Road was taken up by foreigners.

Global financial turmoil is likely to feed continued overseas interest in Singapore.

Source : Channel NewsAsia – 17 Aug 2011

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