If you have never heard of SIBOR before, you probably have not been reading the news lately or have no interest at all in getting a house for yourself. Yes, the increasing SIBOR has been all the rage lately and it is no wonder. Many people who have taken out housing loans pegged to SIBOR are feeling the pinch now as rates continue to rise.
What exacty is SIBOR? Let us try and explain it as simply as we can.
It stands for Singapore Interbank Offered Rate. It is fixed by the Association of Banks of Singapore and is an interest rate that is used between all the different banks within the Asian time zone when banks borrow from each other. Yes, banks do borrow funds from each other and this is the rate that they follow. SIBOR is regarded as a benchmark be it for the borrowing side or the lending side within the financial arena in asia.
What is the significance, you may wonder? You may not know it but home loans pegged to SIBOR have been popular with Singaporeans who are looking to finance their newly bought homes. Why is that so? Because, SIBOR has been believed to be much more stable than any other rates because of the relatively strong Singapore dollar. The loan option that is pegged to SIBOR is very much popular with home owners who buy property for their own usage. With short-term properties investors, however, it may not be their first choice depending on the market at the point of entry.
How is SIBOR faring lately? Not so good. In fact, there have been much grumbles about how SIBOR rates have been soaring and fear to not be stabilising any time soon. Well, that is another nugget of news for another time.Continue Reading...