SIBOR remains on the uptick

Nikki Diane De GuzmanFebruary 18, 2015

The Singapore Interbank Offered Rate (SIBOR) continues its steady upward movement touching 0.67863 percent on 3rd February and remained around the same level throughout the month, posting a rate of 0.67288 percent.

SIBOR is a key interest rate at which banks loan to one another and is a commonly-used measure in the cost of funds. The rate has been seen creeping up since the end of last year.

Since the beginning of January, SIBOR has increased by about 50 percent following several years of low and is now at its highest in about five to six years. Currently, it stands at almost double its lowest in record which was 0.344 percent in 2011.

In earlier reports, experts said the 3-month SIBOR is expected to reach around 0.7 percent in June, and could potentially hit 1 to 2 percent at the end of this year, with the continuing weakness of Singapore dollars versus the green back, as well with the US Federal Reserve set to raise interest rates by Q3 this year.

Given this, it is also reported that some home owners are already feeling the pinch with those who took out variable-rate loans on their houses are now seeking to refinance to a fixed-rate loan as SIBOR is also the rate used to determine the interest rate of housing loans. Potential property buyers are also expected to be more cautious in making home-financing decision given the current rate levels.

In a statement to PropertyGuru, Citibank Singapore’s Head of Secured Finance and E-Business, Peng Chun Hsien said: “We expect potential property buyers to pay more attention to fluctuations in housing loan interest rates and spend more time to understand the differences in benchmarks rates such as SIBOR compared to board rates. Housing loan applicants will likely be more interested in the various benefits and features of the housing loan such as cash management facilities enabling a reduction in the interest paid, and SIBOR tenor switches at no cost and lock-in periods.”

Echoing this, Colliers International said: “If the uptrend of 3-month SIBOR continues, home owners are expected to service a higher monthly mortgage. Hence, homebuyers should calculate their affordability to service their monthly mortgage carefully before they commit to a property purchase.”

It is noted that last year, financial analysts expected the 3-month SIBOR to reach around 0.7 percent in June, and said that it could potentially hit 1 to 2 percent at the end of 2015 as the US Federal Reserve is set to raise interest rates by Q3 this year.

While the increase represents a 50 percent surge, experts noted that the current rating is still well below historic levels and are unlikely to return the rates recorded in the pre-crisis period.


Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email




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