While the US debt default is still being debated, it seems quite certain that the US Credit Rating will be downgraded. What this means is higher interest rates. What will happens is, US treasuries will have to pay higher interest to attract buyers, since they’re deemed more risky than before. Such an increase in the yield of the US treasuries will ripple through other types of bonds and finally to mortgages also. Basically it means interest rates here (SOR and SIBOR) are primed to go up.
The Monetary Authority of Singapore (MAS) has proposed (but not enforced?) that financial institution provide a fact sheet informing consumers who take up a loan the monthly instalment they have to pay when interest rates go up. Looks to me like a “don’t say we didn’t warn ya”. I reckon it’ll probably be some time (maybe a year or two?) before the repercussions start to kick-in. Note to self: don’t say i didn’t warn you.
