Holy Cow! SOR hits negative territory!

The Daily SOR chart looks rather different today. SOR rates are sub-zero! Initially i thought it was due to some error, but realized later that the negative figures are for real. This is probably mostly due to the plunging treasury yields, plus the Fed’s decision to keep record low rates till mid 2013 and low USD/SGD rates. As the market is very volatile at the moment, this may be just a short term occurrence.

If SOR stays below zero, i wonder what it translates to for SOR pegged loan mortgagees. Might have to pay for just the bank margin portion of the loan interest (hurrah?!).

Update: found out that as stipulated in the loan contract, the interest rate is and always is SOR + bank margin, even if SOR is negative, so you end up paying less than the bank margin!

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