Property News · January 4, 2017

What’s next for Singapore property after Fed hike?


Fed rate increase draws mixed reaction among Singaporean lenders
Marina Bay Sands and Helix Bridge in Singapore. Suchat Nuchpleng / Shutterstock.com
Singapore’s financial institutions are still reckoning with the decision of the US Federal Reserve to hike interest rates last month.
The Singapore interbank offered rate (Sibor), a three-month benchmark for housing loans, spiked to 0.96 per cent followed the Fed’s announcement.
The Fed Reserve rate hike, the first in almost a decade, is widely seen as a presage to three more increases next year. As a result, the Sibor, which is correlated with American interest rate movements, may rise 1.05 percent by Q2 2017, according to United Overseas Bank (UOB).
“Households will be affected mainly through mortgage loans, while firms will need more cash to repay their corporate borrowings,” UOB economist Francis Tan told Straits Times. “This will increase their business costs even further.”
The Fed Reserve interest raise could not come at a more inopportune time to some analysts. CIMB Private Bank economist Song Seng Wun told the Times that the hike’s timing “is not good” for Singapore in the short term, given its decelerating economy, and “coincides with a worsening in labour market conditions.”
The hike has left many banks across the country in a contemplative mood. Fixed-rate mortgage packages have been left susceptible to mass pullouts as institutions strive to protect their margins.
DBS and Bank of China have already withdrawn several fixed-rate packages this week, the Times reported.
“We expect to see further home loan interest rate changes in the upcoming weeks as the Chinese New Year period draws near, which is typically a time when banks update their rates,” Grace Cheng, co-founder of personal finance website GET.com, said.
Read next:

Source : property-report.com
Read more…What’s next for Singapore property after Fed hike?

You may also like...