Mortgage rates may rise a 'few times' in 2022: property expert

The expected increases are on the back of faster inflation growth.

Mortgage rates in Singapore are expected to increase by a "few times," in 2022 amidst faster inflation growth globally, property expert, OrangeTee, said.

Singapore's domestic interest rates are highly influenced by global market movements, according to OrangeTee. and given that the Federal Reserve has moved to increase its interest rate in three years, the city-state would likely be impacted.

But since safeguards like mortgage servicing ratio (MSR) and total debt servicing ratio (TDSR) have already been put in place, OrangeTee believes the majority of flat owners may not be too adversely affected by the rate hikes.

"The impact of the interest rate hikes is dependent on various factors like the loan quantum and the investment portfolio of a buyer...Although more buyers are taking loans from private institutions in recent years, the loan quantum for most flats is not large," OrangeTee added.

Buyers who have taken the HDB housing loans are also unlikely to take a hit from the increasing interest rates, according to OrangeTee, saying the group would be the "least affected" by the movement since the concessionary housing loan interest rate remains stable, pegged at 0.1% above the CPF Ordinary Account interest rate. 

What would affect HDB buyers, which are mostly middle- and lower-income Singaporeans would be the rising cost of living, OrangeTee said. This could lead to reluctance from this group to pay top dollar for resale flats. 

"Buyers may be more price-sensitive and select cheaper homes such as smaller units or those further from the city centre," OrangeTee said.