Rising interest rates and private home prices could push some out of market: IREUS
A combination of rising interest rates and property prices is bound to impact buyer affordability - the question is where that tipping point lies. A recent analysis has shown that buyers are still able to afford private homes despite recent rate hikes, but depending on the loan tenure, they may start getting priced out of the market if mortgage rates reach 3.5 per cent and beyond.
This scenario is based on modelling done by the Institute of Real Estate and Urban Studies (IREUS) at the National University of Singapore, using a proxy household at the top 30th percentile of income. In general, the top 30 per cent of earners are mainly the ones who can access private homes.
As inflation continues to surge, the US Federal Reserve has announced significant interest rate hikes to bring prices down to a sustainable level. Since lenders here take their cue from the Fed, Singapore interest rates have risen as well.
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