Interest Rate Roundup

The recent property buying frenzy has given rise to increased interest in interest rates, as evident from the higher traffic volume to this blog (thanks for visiting!). I reckon it’s time to do a roundup on interest rates.

Interest rates are still generally very low. Libor is at a record low, and central banks worldwide continue to keep interest rates low. In Singapore, the 3-month SIBOR and SOR are holding steady at 0.69% and 0.6% respectively. This translates to rather favourable home loan rates, though they are “for a limited period only”. As an example, one bank offers a floating rate package at 1.68% (Year 1), 2.48% (Year 2) and 2.88% (Year 3) for 3 years lock-in. Another bank offers an attractive 1.6% (Year 1), 2.6% (Year 2) and 2.9% (Year 3) fixed rate package (yup, FIXED, at rates that are comparable to other floating rate packages).

Another trend to note is the increase in the margin banks are charging for SIBOR and SOR pegged loans. For one particular bank, the margin has gone up by 1% over the past 1 year! This makes SIBOR and SOR pegged loan packages less competitive, and perhaps this is the intended effect. With many predictions by analysts that the Feds will keep rates low well into 2010, there is still relative safety in taking up SIBOR or SOR pegged loans, though it is for sure that interest rates will go up some time in the future, when policy makers take the necessary action against rising inflation. The latest official figure for CPI in Singapore is up by 0.8%.

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