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The Iran conflict is not a distant one. It could push up home loan interest rates in Singapore
Much will depend on how long the war lasts. If it is prolonged, central banks may have to tighten policy and raise rates.
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There is a clear risk SORA could rise over the next few months, and as SORA is the benchmark for mortgage rates, they will rise too, says the writer.
ST PHOTO: KELVIN CHNG
Arup Raha
If you had a home loan in early 2022, you would probably remember the start of the Russia-Ukraine war with a bit more pain than most. The then most commonly used benchmark rate for mortgages, the three-month SIBOR (Singapore Interbank Offered Rate), increased from about 0.5 per cent to over 4 per cent and mortgage rates rose in tandem. Moreover, rates stayed high for about two years before starting to soften.
In fact, you didn’t need to be a home owner to have felt the pain as the inflation rate rose to around 7.5 per cent and remained elevated for several months. The price of oil went as high as US$120 a barrel and the Singapore dollar weakened. There was economic pain almost everywhere.
