, Singapore

Check out why low interest rates will persist until 2015

US interest rates are a major indicator.

Barclays forecasts the Fed funds rate to remain unchanged until 2015 at the earliest.

According to Barclays, given a strong correlation of USD and SGD rates, barring any tail risks and their impact on liquidity, it expect SIBOR to remain low until 2015.

"With the current environment of super-low interest rates and high liquidity likely to continue, we expect these to continue supporting asset valuations for developers (low cap rates, rent yields required) and the wide yield gaps for the S-REITs (low comparable risk-free rate)," it said in a report.

"Our banks analyst, Sharnie Wong, expects ongoing acceleration of mortgage credit of between 10-12% y/y in FY12-14E. Mortgage rates are currently at historical lows of 1-1.5%, on historically low SIBOR of 0.4%. Moreover, we believe the Singapore banks are beneficiaries of continued fund inflows from Asia’s rising wealth which will continue to enhance the funding position of the Singapore banks," it added.

 

 

 

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