Rise in Singapore home loan rates likely to continue

Just as the property market picks up, so do home loan rates. 3 of the local Singapore banks have raised their home loan rates as interest rates rise. Financial analysts expect more hikes to present themselves in due course.

Junction 9 Residence, Yishun. Picture: iProperty

The improving market environment and positive outlook has buoyed sentiments all around, from developers to sellers, investors, and buyers. Taking this into account, banks are beginning to increase their home loan rates. DBS Bank, OCBC Bank and United Overseas Bank (UOB) have all raised the interest on fixed-rate and floating-rate packages since November.

Related: MAS cautions against sudden property market fervency

DBS and UOB have increased their home loan rates by 10% per year. In October, the rate for a fixed-rate package was 1.68% per year. Now, it stands at 1.85%. They are confident that the raise will not affect demand as it remains strong.

Time factor crucial to refinance or to secure a new home loan

For now, HSBC and Bank of China have not moved their home loan rates. Yet. But with banks raising home loan rates slowly but surely, the time to secure a new home loan or to refinance is now. This year’s market buoyancy has raised home prices, sales volume and now home loan rates. While 2018 may be a good year for sellers and developers, buyers and investors will have more numbers to grapple with as the market picks up.

The 3-month Sibor (Singapore interbank) offered rate has risen for 5 consecutive days and was at 1.21 last Friday, up 8 points from the week before. It is expected to reach 1.4 by the end of the year. The likely interest rate hike by the US Federal Reserve is also expected to have some effect on the Sibor rates.