PROPERTY OWNERS BEWARE: KEY INTEREST RATES IN SINGAPORE RISE SHARPLY

A key interest rate that housing loans in Singapore are pegged to rose sharply for a second day, indicating home owners may face higher mortgage payments.

Bloomberg data showed the three-month Singapore Interbank Offered Rate (Sibor) was fixed at 0.62052 per cent at 11.30am on Tuesday (Jan 6), up from 0.57762 per cent on Monday.

Sibor is the rate at which banks lend to one another and is a widely used measure of the cost of funds. The three-month Sibor had been creeping up previously, rising from around 0.4 per cent in October to around 0.45 per cent at the end of last week.

Many housing loans are pegged to three-month Sibor. Oversea-Chinese Banking Corp (OCBC), for example, is currently offering home loans at three-month Sibor plus 0.85 percentage points for the first three years, according to its website.

The lending rate is reviewed every three months.

Assuming mortgage rates in Singapore rise to 2 per cent from around 1.5 per cent currently, a home buyer with an outstanding loan of S$500,000 and 20 years remaining will need to pay around S$2,530 a month, up from S$2,410. Should the rate rise to 3 per cent, the monthly payment will increase to S$2,770.

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