I was chatting with a friend today about how I’m considering investing in REITs, and he reminded me about how the rising interest rates environment are going to impact REITs negatively, since they mostly have high gearing on their properties.
Then I realized, oh dear! REITs won’t be the only ones affected when the Fed raises interest rates, because that affects our home loans too!
How Your Home Loan Is Affected by the SIBOR
Most home loans are pegged to the Singapore Interbank Offered Rate (SIBOR), which is the rate by which our banks lend to each other. The 3-month SIBOR rate is the most often used standard in such floating rate packages, which means the interest rate you pay on your home loan will be revised every 3 months together with the add-on percentage until the next rate review date.
The SIBOR is tied closely to …