Falling energy prices and a potential slowdown in the United States economy could bode well for Singapore homebuyers.
Bankers and economists have agreed that interest rates may have peaked and are beginning to show signs of a decline.
The key barometer to take note of is the Singapore Interbank Offered Rates (Sibor), which often influences other rates.
Currently, the Sibor stands at around 3.43 per cent; it had earlier peaked at 3.56 per cent in July. Experts have reason to believe that the Sibor could drop to 3 per cent by the end of next year.
The good news for homebuyers is that mortgage rates tend to follow local interest rates, albeit a tad slower.
With mortgage rates poised to embark on a downward spiral, it might tempt homebuyers to choose a variable rate instead of a fixed rate for their mortgage. However, an analyst told Today that it remained a personal choice, and a variable rate would only be be to a buyer’s advantage if the timing was right.
Property experts told Today that mortgage rates would not have much of an effect on property prices.
“This probably will not have much of an effect for foreign buyers, as interest rates here in Singapore are still one of the lowest in the region,” said Mr Chris Koh, vice-president of Dennis Wee Realty.
It seems that it will be business as usual. The property market will continue its boom, as those with cash to spare to further invest in the higher end of the market, said analysts.
Once high-end property prices reach their peak, buyers will turn their attention to the mid-range properties, and subsequently, on to the lower end of the market.
And so, with the prospect of falling interest rates and with the property market on the upswing, it seems that next year will turn out to be a good year for property indeed.
Source: TODAY, 25 November 2006