How does the economy affect Singapore Mortgage Loan Rates?

How does the economy affect Singapore Mortgage Loan Rates?

How does the economy affect Singapore Mortgage Loan Rates? – There are many reasons that will affect the rates of a mortgage loan. This is quite similar across the world and even more so for a financial hub and capital like Singapore. Singapore is a very open economy and relies a lot on trading and exports for the income of the nation.

The economy is affected strongly by the use of a few economic tools and the main one is the interest rates of the banks that is set forth by the central bank of the country, Monetary Authority of Singapore. When the economy is not doing very well, the central bank will usually lower interest rates to encourage borrowing. When businesses borrow, they will invest it into the economy and pay more salaries that will push up the economic activity, people who save will also be more interested in placing money elsewhere because of low interest rates.

Due to Covid-19, we have seen the USA through its Federal Reserves lower its interest rates. With this the Monetary Authority of Singapore followed suit and also started to lower its rates. With the economy is such bad shape at this current moment, there is a high demand for loans and to ensure businesses can survive this period of downturn, we expect to see the interest rates to get even lower or maintain at such low rates.

So how does this affect Singapore Mortgage Loan rates?

When there is a lower interest rate across the board for most of the economy, the interbank loan rates will also fall. Interbank loan rates are what the banks will charge each other for loaning money between them. This will allow the banks to give out loans when they are able to inject money through loaning into the system.

With this the loan rates will fall and with it the interest that a borrower will need to pay when they are trying to buy a new home or they are trying to refinance a Mortgage.

Singapore Mortgage Loan rates are currently at a very low rate hovering just slightly above 1% for most parts and with the fixed rates at about 1.5% they have never been this low for a long time.

Singapore economy is likely to slide and we will see a tougher period during this few months to a year.

If you are looking for a new home loan broker in Singapore, or Singapore Mortgage Refinancing you can talk to our partners at Avant Mortgage, they are experienced and able to give you a good idea for your property, what you can go for to help you to save money overall.


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