SOR has fallen consecutively for 3 days to a new low of 1.09%!
SIBOR or SOR pegged loan packages may be drawing more interest now that there are no more cheap mortgages as banks raise rates. Quoting from the Jun 12 article:
No more cheap mortgages as banks raise rates UOB and OCBC Bank have raised rates for their three-year, fixed-rate mortgages to 3.68 per cent from 2.98 per cent. Standard Chartered Bank has raised its rate for its two-year, fixed-rate package to 3.78 per cent a year from about 2.68 per cent .. market players may now be raising rates to squeeze higher margins from new loans
At the same time, banks seem to be fighting for customers in the SIBOR or SOR pegged loan segment, as is evident from the new loan package from HSBC featuring a decreasing interest rate spread. This article explains:
Under the new loyalty package, the customer pays the 3-month Sibor rate plus 0.75 per cent in the first year; in the second year, he pays 3-month Sibor plus 0.65 per cent; and from the third year onwards, the rate is 3-month Sibor plus 0.55 per cent. The 3-month Sibor on July 1 was 1.25 per cent.
Banks may be raising their fixed-rate mortgages in anticipation of interest rate increases by 2H08 and beyond. There has been repeated calls to raise interest rates to counter inflation. Meanwhile, it may be worthwhile taking up a SIBOR or SOR pegged loan since they typically come with minimal or no lock-in period, making it possible to switch to a fixed-rate package when broad interest rate hikes really take place.