The continuous increase in interest rates are expected to taper off given the slower rate of economic growth, favoring Singapore homeowners when it comes to cheaper mortgages.
The downturn follows the US Federal Reserve decision to maintain interest rate increase on hold while lowering the pace of future rate hikes.
The US central bank has pointed out that rate hikes would be more slower than expected, given concerns on the slow job growth and Britain's decision to leaving the European Union.
In fact, the Fed has continued the target range of 0.25 to 0.5 benchmark federal funds rate.
In Singapore, the 3 month Singapore interbank offered rate (Sibor), which is applied as a benchmark to set loans for home, declined from its peak of about 1.25% to around 1%.
Homeowners with Sibor-linked mortgages would benefit instantly from Sibor's recent drop.
According to FindaHomeLoan founder Sean Lim, given the weakening property demand and drop in rates, banks are having a price war on offering packages for home loan.
Some of major banks have recently reduced rates from 10 to 20 basis points for fixed and variable home loans.
Lim explained that a 3 year package for fixed loan is now at 1.8%, down from 1.99% in March up to April, while 2-year package for fixed home loan is now at 1.65%, reduced from 1.9 in March to April.
Despite of sluggish home sales, many foreign investors remain keen in Singapore properties, including the Gramercy Park and Victoria Park Villas.
Written by Siang Teck of Property Review. I can be contacted at [email protected]
