Homeowners brace for higher mortgage payments as SIBOR hits 4-year high

Will debtors be able to cope?

Homeowners should expect their housing loan payments to tick up steadily as the SIBOR, the benchmark rate for home loan packages, continues to climb decisively amid the Singapore dollar’s weakness.

According to Maybank Kim Eng, the three-month and six-month SIBOR jumped by an average of 15 base points within the past two days, breaching levels not seen since April 2010.

“Based on our estimates, a 1ppt increase in SIBOR would raise households’ monthly housing repayment by 12%. Higher rates benefit banks as their liquid assets are mostly of short duration. Most loans, especially mortgages, are pegged to short-term rates. Credit quality should hold up, backed by banks’ safety nets and macro-prudential measures targeting the consumer sector. Housing-loan resilience during the 1998-2003 economic setbacks also comforts us,” stated Maybank Kim Eng.