A key benchmark lending rate rose above the 1 per cent level for the first time in more than six years, indicating that mortgage rates will increase further in coming weeks.
The three-month Singapore interbank offered rate (SIBOR) was fixed at 1.00129 per cent on Tuesday (March 24), according to Association of Banks in Singapore (ABS) data posted on Bloomberg, up 0.9 per cent from Monday’s fixing of 0.99216 per cent. The rate has been climbing steadily since end-December when it stood at around 0.45 per cent.
Many home loans in Singapore are pegged to SIBOR. For instance, Oversea-Chinese Banking Corp (OCBC) has a home loan package that charges an interest rate 0.85 percentage point above three-month SIBOR. If SIBOR rises, the interest rate will also increase. OCBC will review the rate every three months based on movements in SIBOR.
Singapore interest rates have been on the rise, in line with expectations that the US Federal Reserve will increase interest rates this year.
The weakening of the Singapore dollar against its US counterpart has also pushed rates higher since investors need more incentive to hold onto the local currency. The Singapore dollar is currently trading at around S$1.37 to the greenback, from around S$1.32 at the end of last year.
Source : Channel NewsAsia – 24 Mar 2015