The interest rates that have a direct impact on mortgages here have been rising and are now at levels last seen in the 2008 financial crisis.

The sharp rate increases in recent days are a sign that general economic concerns - from volatility in the Singdollar to fears over the Chinese slowdown - have now affected the short-term money market.

The three-month Singapore interbank offered rate (Sibor), which is widely used to price mortgages, was at 1.252 per cent yesterday, up 5.6 per cent from Dec 31. Another key benchmark, the three-month swap offer rate (SOR), was at 1.762 per cent on Wednesday, up 3.7 per cent since Dec 31.

Higher interest rates and the prospect of them rising further put pressure on home owners.

MoneySmart chief executive Vinod Nair said a growing number of owners are shifting out of Sibor- or SOR-based mortgages and refinancing to loans pegged to fixed deposit rates or fixed rate loans with a tenure of one to three years. SingCapital chief executive Alfred Chia warned of higher borrowing costs ahead: "With fixed deposit rates rising, it is just a matter of time before local banks have to review and increase their respective board rates and prime rates as well."

Rising interest rates in the US are luring global investors back there, sending the greenback's value up relative to currencies like the Singdollar.

Mr Khoon Goh, a senior strategist at ANZ in Singapore, said a weaker Singdollar could put further upward pressure on Sibor and SOR. That is because a weaker Singdollar could result in the outflow of funds, and reduce the supply of Singdollars in the local money market. This will cause interest rates here to rise.

OCBC Bank economist Selena Ling sees the Singdollar testing 1.4670 against the greenback before the year is out, and for the three-month Sibor and SOR to similarly test 2 per cent.

Her forecasts assume that there will be no changes to monetary policy here, with the yuan stabilising, and that oil does not slide towards US$20 a barrel.