May 13, 2010 - PropertyGuru.com.sg
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Interest rates in the home loan market are dropping and could end up close to zero, which is good news for mortgage holders, but pain for anyone looking for some returns on their bank deposits.The trend of interest rates in Singapore is in stark contrast to Australia and other Asian countries, where central banks are lifting rates to fight inflation.
Rates in the country began dropping after the Monetary Authority of Singapore (MAS) decided to let the Singapore dollar rise against a basket of currencies.
The MAS has been intervening in the currency market to hold rates at normal levels, as well as keeping the Singapore dollar within its trading band.
Mr. David Carbon, DBS’ managing director for economic and currency research, estimated that the MAS has intervened around US$63 billion, but it has now allowed for the currency to appreciate and let the interest rates adjust back to its actual levels.
The response of the money market has been drastic, and after hovering at around 0.65 percent for the past 14 months, the benchmark three-month rate of the Singapore Inter-bank Offer Rate (Sibor) dropped 13 basis points, down to 0.52 percent two weeks ago, before slightly climbing to 0.53 percent.
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Reader Comments: (3 comments)
looks like the banks are taking actions about mortgage holders' rising concerns on paying their loans, as well the increasing number of foreclosures.
i guess this is really good news as this will keep people in a position where they can pay for their mortgages without too much strain.
although many people feel secure that they can now afford their mortgages, they shouldn't expect it to go down further. It will go back up at some point.