What rising interest rates mean for Singapore property
- As the era of ultra-low interest rates fades, Singaporeans with mortgage payments are feeling the pinch. But is it homeowners or investors who are most at risk of getting their fingers burned?
Homeowner Grace Koh had barely settled into her new condominium apartment along Singapore’s breezy East Coast in August, when the interest rate on her mortgage jumped from 1.5 per cent to 1.8 per cent.
When she first took out the S$1.1 million (US$800,000) home loan with her husband in June last year, the interest rate had been an even more attractive 1.3 per cent.
Their mortgage is pegged to a floating interest rate that fluctuates according to the rise and fall of the Singapore Interbank Offered Rate (SIBOR), the benchmark rate at which banks borrow from one another.
The SIBOR, in turn, is closely correlated to interest rates in the United States, which have been on the rise since late 2016, and are likely to continue on an upwards trajectory.
But for Koh, 28, a legal counsel, the rate increases on her home loan – all in under two years – still came as a rude shock.
She and her husband had gone with a floating rate package for their loan simply because “it was the lowest rate” they were offered.
