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SIBOR Spike: How Will this Hit Singapore Homeowners?

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If you took a housing loan from the bank that’s tied to SIBOR (Singapore Interbank Offered Rate), you’re going to have to pay more on your monthly loan instalments because of the spike in SIBOR rates. In fact, more homeowners are now looking for refinancing options because they need help with their monthly payments.

Take 30-year-old engineer Lai Ming Kwan. He bought an executive condominium two years ago with his wife and they chose a loan tied to SIBOR.

“They predicted that it will stay at 0.3 per cent to 0.4 per cent for a few years. I did not expect it would go up to so high … SIBOR is increasing so fast that my pay cannot catch up with the financing rates.”

The one way to relieve this burden is refinancing – replacing your current housing loan with one that is pegged to fixed interest rates instead of variable rates.

BUT this can only be done if you are not stuck in a lock-in period with your bank.

With interest rates rising, banks can be expected to review their mortgage rates and plans.

Analysts have warned homeowners to choose housing loan packages that are best suited to their needs.

SIBOR in a Nutshell

SIBOR is the acronym for Singapore Interbank Offered Rate. It is the reference rate in which financial institutions lend to other financial institutions. It is determined by the Association of Banks in Singapore (ABS) and also commonly referred to as SIBOR rate or SIBOR rates when home buyers are on the lookout for a good and suitable housing loan for their real estate purchase. SIBOR rate is the Singapore equivalent to the globally known London Interbank Offered Rate (LIBOR).

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