Mortgage Rates Forecast for 2018

Posted on Posted in Useful Mortgage Guides

With our mortgage rates closely affected by The United States (US) Federal Reserve (the Fed), it is no surprise that homeowners like you and I are eagle-eyed about all news relating to interest rate hikes. The glory days of interest rates averaging below 1.2% are long gone, with President Trump announcing fiscal stimulus and tax cuts as growth measures, on his agenda.

The general consensus is interest rates are set to increase in 2018. With the Fed’s rates affecting the Singapore Interbank Offered Rate (SIBOR) or Swap Offer Rate (SOR), this spells bad news for property owners – especially property investors. The predicted rise decreases the rental yield, eating into potential profits. This is an added challenge on top of the current abysmal rental market.

The planned tax cuts would stimulate the recovery of the US economy, which means the Fed will increase interest rates accordingly to counter inflation. We keep a piercing outlook on the US economy as the Monetary Authority of Singapore (MAS) uses the exchange rate to determine the rise or fall of the Sing dollar. This is done through the Singapore dollar nominal effective exchange rate (S$NEER) which is trade-weighted against an undisclosed basket of currencies as its main trading partners. Although it is undisclosed, it is no secret that the US is part of the basket.

While SIBOR and SOR are intertwined with the Fed’s rates, SOR is more volatile as it depends on the strength of the US dollar. The Fed’s rates are set to increase thrice in 2018, with an average increase of 0.4 percentage points.


If your current mortgage is a SOR package, it is best to consider refinancing in light of the situation. Rest assured that our experienced mortgage brokers at HugMortgage will find you the best package for your needs – for free! Have any burning questions or worries? Allow HugMortgage to help you today!

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