The 3m/12m SIBOR (Singapore Interbank Offered Rate) broke out last week to refreshed 10-year highs to 1.76% and 2.06%. As a comparison, the current 3m SIBOR 1.76% is 70 basis points above the 2017 average of 1.06%. For a mortgage loan of $1 million with 20 years tenure, the impact of this 70 basis points would be an increase in monthly interest payment of more than $300. I'm truly glad that I chose to pay off the mortgage a few years back instead of investing the monies into bonds!
One man's poison is another man's cure. While the surging SIBOR is bad for borrowers, it is going to be great for savers. For instance this month, UOB is offering a fresh funds promotional interest rate of 1.75% for the next 3 months with no capital lock-up! The 1-year Singapore Savings Bonds rate is at a new high of 1.89%. At this rate, we are going to be looking at 2% and upwards for such products soon. Exciting times to be a saver, heh heh.
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