US CENTRAL BANK CUT INTEREST RATE

us bank rate cut

𝗨𝗦 𝗙𝗲𝗱 𝗰𝘂𝘁𝘀 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗿𝗮𝘁𝗲𝘀 𝗳𝗼𝗿 𝘀𝗲𝗰𝗼𝗻𝗱 𝘁𝗶𝗺𝗲 𝘀𝗶𝗻𝗰𝗲 𝟮𝟬𝟬𝟴

Just a couple of days ago, the US Central Bank has cut interest rates for only the second time since 2008, amid concerns about slowing global growth and trade wars.

The Federal Reserve lowered the target range for its key interest rate by 25 basis points to between 1.75% and 2%.

There is hint that there maybe another cut towards the end of the year.

 

IMPACT ON SINGAPORE MORTAGE INTEREST RATES

This cut spells good news for home-buyers because it will lead to lower borrowing rates.

Central banks around the world often take their cue from each other, particularly from the likes of the Federal Reserve and the European Central Bank (ECB). The changes in interest rates around the world impacts the global money market, in turn affecting the Singapore Interbank Offered Rate (SIBOR).

In this case, SIBOR–pegged floating rate home loans would be influenced by the Fed’s actions to some degree.

However, SIBOR is also influenced by other factors, including any adjustments made by the Monetary Authority of Singapore (MAS) to the Singapore dollar Nominal Effective Exchange Rate (S$NEER) policy band.

S$NEER is the exchange rate of the Singapore dollar against an undisclosed basket of currencies of Singapore’s major trading partners, and the MAS manages this exchange rate by adjusting the slope and the width of the policy band in which the exchange rate is allowed to fluctuate.

 

CURRENT HOUSING INTEREST RATES

Just not too long ago, housing borrowing rates had risen to more than 2%. When US Federal Reserve cut their rate about 7 weeks ago, some banks are offering as low as 1.93%. With this further cut, some banks now are offering as low as a fixed interest rate of 1.9%.

Historically, low borrowing rates had resulted in higher demands for housing.

Sales volume of new condo launches in recent months continue to be robust in spite of poor economy. A further interest cut will continue to maintain the trend.

August sales for new condos hit 1,122 units which is considered high for a traditionally lull ‘ghost’ month.

interest rates
august 2019 new home sales
Danny Han

Danny Han

Associate Deputy Group Director
OrangeTee & Tie Pte Ltd

Danny has been a licensed real estate agent since 2005 and has helped many in Property Wealth Planning.

Do drop him a Whatsapp message or send him an email for a discussion if you are planning to grow your property wealth.

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