How CapitaLand will be hurt by a string of mortgage rate hikes

Will primary sales volume be affected?

According to OCBC, in Singapore, while the Fed fund rate is seen to be kept low till 2015, increasing visibility of a QE exit scenario have moved bond yields to recent highs. 

OCBC said that going forward, they believe a trend of rising mortgage rates would likely ensue from here. From OCBC's sensitivity analysis, for a S$1m loan, an increase of 50 bps would increase monthly mortgage payment by around 7%.

"Our judgment is that while rising rates alone are unlikely to trigger dramatic residential price downside, it would likely weigh on primary sales volume ahead," OCBC said.

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