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Sibor rises to 0.734% - almost double the year-ago rate
THE key three-month Sibor or Singapore interbank offered rate continues to rise; at 0.734 per cent on Tuesday, it's almost double the rate one year ago due to continued US dollar strength. The three-month Sibor was 0.389 per cent on Feb 21, 2014.
From last Wednesday, the three-month Sibor on which most mortgages are priced off is up 7 per cent and the forecast is for more US dollar strength and higher interest rates.
"It's a function of US dollar strength," said Alvin Liew, United Overseas Bank senior economist.
UOB expects the US dollar to end the year at S$1.40, up from S$1.36 now, and the three-month Sibor to reach one per cent by then.
Said Selena Ling, OCBC Bank head, treasury research & strategy: "Our six- and 12-month forecasts for three-month Sibor are 0.8 per cent and 0.95 per cent respectively.
"There are upside risks mainly due to the SGD weakness, coupled with the firmer direction from US short-term interest rates ahead of a potential lift-off by the US Federal Reserve around middle of the year."
Another benchmark interest rate - the three-month SOR or swap offer rate - which is typically used for commercial loans, also rose to a 52-week high of 0.944, up more than 5 per cent from last Wednesday.