Yen Kai's Idea Cast

There has been a lot of volatility in the SOR and SIBOR the past few days, reacting to the jump in LIBOR as people are "afraid to lend to one another". The 3 month SOR has broken through the previous high of 1.63 to hit 1.7, since i started tracking it in April. This is in somewhat divergent from the recent report that mortgage rates are still at rock bottom.

The picture will be clearer after the dust has settled on the financial crisis that has erupted in the US, except that we don't know when and what surprises may still come our way. My guess is that the appreciation in swap rates will be moderate. An analyst expects swaps to come off due to slowing economic growth and a tougher business climate. This, coupled with slowing demand for properties seems to have already triggered off competition among banks for the housing loan market, as evidenced by MayBank's new offering.