Singapore home loan rates hit new high of 3.08% with latest move by UOB
Singapore home loan rates hit new high of 3.08% with latest move by UOB. With UOB’s latest move, Singapore home loan rates have risen above 3% to a new high. In mid-2019, the previous recent high was 2.88 percent.
On Wednesday night (June 29), UOB increased the rate on its three-year fixed rate package to 3.08 percent per annum, up from 2.8 percent previously. UOB stated that its floating rate package, which is based on the three-month compounded Singapore Overnight Rate Average (Sora) plus a 0.8 percent margin, will remain unchanged. The rate for its two-year fixed rate package was raised from 2.65% to 2.98% per year.
Citi has also confirmed to The Straits Times that the rate for its new two-year fixed rate package for Citigold clients is 2.95 percent, just 0.05 percent shy of the 3% mark.
DBS Bank, Singapore’s largest lender, raised its two- and three-year fixed rate packages to 2.75 percent on Wednesday. The bank also removed a five-year fixed rate package at 2.05 percent that was only available to Housing Board home owners. Singapore home loan rates have been steadily rising since the fourth quarter of last year, when three-year fixed rates were at 1.15 percent.
They accelerated higher this year after the Federal Reserve of the United States began aggressively raising rates to combat high inflation. The Fed has raised rates three times this year by a total of 150 basis points, or 1.5 percentage points, bringing its benchmark rate to a range of 1.5 percent to 1.75 percent.
According to Mr Clive Chng, associate director of mortgage broker Redbrick Mortgage Advisory, the bank’s hedging costs have increased in this rising rate environment, forcing them to raise rates to cover their costs. According to Mr Ernest Tay, a real estate consultant at Huttons Asia, fixed rates consider the future rate trajectory. With interest rates expected to rise, Mr Tay added that banks must price that in and thus raise their rates.
According to Mr. Kevin Kwek, a senior analyst at Sanford C. Bernstein, the rate hike momentum may slow in the future. “From the bank’s perspective, aggressive first hikes are in place, and yield curve predictability is also higher now as to how hikes will play out,” he added.
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