Key benchmark rates in the republic were up on Thursday (17 December) following the Fed’s rate hike announcement—the first in nearly a decade.
The three-month Singapore interbank offered rate (SIBOR) edged up slightly to 1.133 percent from Wednesday’s 1.132 percent. The current rate is still below the 12-month high of 1.139 percent recorded in September, but is almost three times the 0.444 percent recorded in the same period a year ago.
SIBOR is the key interest rate at which banks loan to one another and is a widely-used measure of the cost of funds. It is also the rate used to determine the interest rate for housing loans.
As the rates are expected to increase gradually in the future, analysts expect the rate hike to have an impact on the local and global property scene.
“The long-awaited Fed rate rise will have a marginal short-term impact on global property markets. However, the hike will likely affect the Singapore market more than others in the region as historically, Singapore’s monetary policy has closely followed that of the Fed. Therefore, we expect to see a decrease in mortgage applications and further downward pressure on the Singapore property market, in light of this and the government’s continued market cooling measure,” said IP Global Singapore director Alex Bellingham.
“The upside of this move, however, is that the Singapore dollar will likely continue to appreciate [against] other major currencies,” he added.
Colliers International said: “As long as the cooling measures and loan curbs remain in place, coupled with the Federal Reserve’s rate hike announcement [on Wednesday], sentiments in the private residential market is expected to remain subdued. This is despite the fact that some developers are ready to adopt a more competitive pricing strategy to move sales.”
“On a 12-month view, we think that the higher interest rate environment and an over-supply of residential homes could prompt the government to rethink their stance on policy relaxation, particularly if the market sees further price correction,” it added.
The Federal Reserve raised interest rates for the first time in nearly a decade on Wednesday (16 December), with a range of benchmark rates increasing by a quarter of a percentage point to between 0.25 percent and 0.50 percent.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
