Debt obligations will jump by over 10%.
The end of easy money is finally here, and Singaporeans saddled with mortgage loans should brace for higher debt repayments in coming months.
An analysis by DBS showed that if the 3-month Singapore Interbank Offered Rate (SIBOR) jumps to 2% by the end of 2016, debt obligations of average households will increase by around 10.6%.
Most home loans are pegged to the SIBOR, which currently hovers at 1.1%. DBS expects this rate to rise to 2% over the next 12 months.
A typical first-time property buyer with a $1 million home will have to pay $420 more per month, assuming a 1% rise in interest on a $0.8 million home.
Every 1% increase will increase mortgage payments by 10.6%, ranging from S$140/mthS$1,200/mth for loans of S$280,000 – S$2,400,000.
Meanwhile, A scenario of a 3% increase in mortgage rates for a typical S$1.0m – S$1.25m property purchase will increase mortgage rates by approximately S$1,200/mth – S$1,600/mth
Do you know more about this story? Contact us anonymously through this link.