Forgot your password?

Don't have an account? Create An Account

For agents interested in participating on SRX, please contact us at +65 6635 3388 or write to us at


Achieve the life you want, in the home you love
Property News17 Mar 2017

Fed rate hike: Expect to pay more monthly on home loans


Home owners in Singapore can expect to pay a higher monthly instalment on their housing loans, on the back of a rate hike by the United States Federal Reserve.

The US central bank raised its benchmark federal fund rate - the rate banks charge each other for overnight loans - by a quarter of a percentage point on Wednesday.

Given that Singapore interest rates are closely correlated with those in the US, this will tend to push up rates on credit cards, mortgages, vehicle loans and bank savings accounts.

For example, Sibor, or Singapore interbank offered rate, is a benchmark for many home loans here. As it follows US rates closely, a Sibor rise is expected.

Mortgage Supermart Singapore broker Keff Hui said the impact "is overall minimal, as the rate hike has been widely expected and largely priced in".

Ms Regina Lim, JLL head of capital markets research of South- east Asia, agreed, noting that the three-month Sibor base rate has spiked by about 50 basis points to about 0.94 per cent since last November, and the six-month Sibor moved similarly to 1.25 per cent.

The three-month swap offer rate, or SOR, used to price commercial loans, has risen - by about 0.17 to 0.29 percentage point - since the Fed's December hike, and sharper than Sibor's increases which were muted, said Mr Hui.

Also, a rate hike would ultimately result in the US dollar's appreciation which, in turn, would cause the value of the Singapore dollar to drop in relative terms, said Mr Heng Wui Liang, country head of personal finance site "Any change in the US dollar would impact the SOR, and since SOR and Sibor are directly proportionate... this will have a strong bearing on Sibor."

Ms Lim said: "Benchmark borrowing rates continue to stay at low levels, and banks remain willing to lend up to 60 per cent for development and completed assets." She added that the "all-in-cost" of capital for property investors remains relatively low.

Home loans are competitive as banks battle for market share, said Mr Hui. However, lenders here were tight-lipped when asked if the Fed rate hike would translate into higher interest payment on loans for consumers.

Borrowers can consider fixed rate or fixed deposit-pegged home loans which are "less volatile to interest rate changes and have more certainty in monthly repayments in the initial years", said personal finance website co-founder Grace Cheng.

Fixed deposit rates also follow Sibor, but analysts do not expect huge movements. Mr Hui said: "Short-term deposit rates may also move higher, but I doubt the impact will overflow onto the longer tenure term deposits."

Mr Heng said deposit rates are not likely to rise as quickly as loans' because "deposit rates are more dependent on the liquidity of the banks, which are currently pretty well-capitalised".

The Straits Times


Like this article? Share it.
mySG Home
Your Digital Home
Track Your Home. Discover Your Wealth
The free, personalized advice, advocacy, and guidance for buying or renting property in Singapore
Property News 26 April
Samsung Hub level 20 sold for S$3,550 psf
Samsung Hub, which received Temporary Occupation Permit in November 2005, is one of the very few 999-year leasehold/freehold buildings in Singapore's Central Business District offering strata office play to investors.
Property News 25 April
Pei Fu building in S$76.25m collective sale
The acquisition - brokered by William Gan Realty - was undertaken by Oxley Kyanite Pte Ltd, in which SLB has an indirect 51 per cent interest with mainboard-listed Oxley Holdings owning the remaining 49 per cent share.
Property News 24 April
Two freehold sites going en bloc
Owners of Park House's 56 apartments, which are approximately 1,571 sq ft each, will receive at least S$5 million, while owners at the four shops, at about 1,528 sq ft each, will receive at least S$6.65 million, said marketing agent CBRE in a statement.
Property News 23 April
Twin Vew preview draws over 7,500 visitors
On its first day on Saturday, visitors turned up nearly an hour before the showflat opened at 10am, said the firm. "The popularity of the range of units was evident by the queues that lasted throughout the day outside all three show units," it said, adding that some were drawn to the development for its proximity to the Jurong Lake District.

Contact Us

Hello Singapore! I'm Sevi. Ask me any property question.
Chat with Sevi
Sevi - AI Bot
Replies in seconds
Need to speak to someone? 6635-3388
I'm Sevi, your personal assistant.

You can ask me basic property questions about transactions, listings, project info and X-value.

Some Examples:

1. Where is Gem Residences located?
2. Are there listings in Hillview Regency for 3 bedrooms and budget of $1.5m?
3. For how much can I sell my property?
4. What are the latest transactions in Bayshore Park?
5. Is it cheaper to buy HDB in Tampines or Jurong East?
6. What is the plot ratio for The Sail?
7. How many blocks are there in Ang Mo Kio Ave 3?

Type RESET or HELP whenever you need.