In a report in channelnewsasia, it is said that the three-month Singapore Interbank Offered Rate (SIBOR) which is a key interest rate that housing loans are pegged has risen higher after starting to rise since end of 2014. According to the report, most of all the mortgage loans taken by Singaporean homebuyers are pegged to SIBOR. Thus, higher SIBOR equals to higher mortgage payments and thus lower disposable income, a double whammy. How high is it anyway? It’s at 0.67863 per cent. This is considered as a low base by any standard even when compared to majority of the other popular property markets. Of course, the reason why it’s a big news is because it has since jumped 50% from January 2015. It’s also at it’s highest point for the past 6 years. Following this, the mortgage rates have also risen and it now between 1.5 and 2 percent, still low but has almost doubled from just 3 years ago.
The Monetary Authority of Singapore (MAS) is fast, as usual and has given a warning that up to 10 percent of borrowers were overstretched. Yes, this is the usual group which will be the first to default once they could not longer afford the mortgage payments. Some of these include owners of multiple units who are also facing falling rentals too. Number of foreigners venturing into Singapore for work has also reduced tremendously. This is to ‘ensure’ Singaporeans are hired first before foreigners. The good news? According to property consultant Colliers International, the current interest rates would continue to remain low and some analysts said that it is very unlikely for the rates to return to pre-crisis highs.
Actually, irregardless of whether we are in Singapore or even Malaysia, it’s always dangerous to overstretch. Very true that during good times, these people would be those who would gain the most, talk louder than majority and go for the most holidays overseas. However, what goes up must come down and property is a sticky item when you try to dispose it during a slowdown. That’s why when market is turning for the worse, it gets bad pretty fast due to the sudden frantic selling. Is this happening soon? The sudden selling of properties from nervous owners? Actually the highest mortgage rates currently is just 2%, plus the MAS is monitoring and it has been reported that 2015 may just be the election year, so the answer is not likely. Nevertheless, it may also be prudent to sell first if the price is still good. Happy reading and stop guessing.
written on 5 Feb 2015
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