SIBOR Pegged Mortgages
SIBOR stands for Singapore Interbank Offered Rate. It is based on the interest rate which banks are offering to lend unsecured funds to other banks in Singapore.
SIBOR home loan packages have been very popular with Singaporeans since year 2008 as the rate is transparent as it’s being published in Business Times, Teletext and the web, ABS SIBOR. Until the recent years, the volatility of SIBOR pegged home loan had caused the clients to switch to Fixed rate or other types of Floating rate.
SIBOR comes in 1/3/6/12 months tenors. Nowadays, banks usually offer SIBOR rate 1 month or 3 month for home loans or commercial industrial mortgage and a longer SIBOR term tenor typically comes with a higher interest rate. The review date of SIBOR loan packages will depend on the chosen tenor such as 1 month or 3 months. (Example if a 3 months SIBOR home loan is took up in January, the bank will review the home loan interest in April for movement of 3 months SIBOR)
SIBOR pegged home loan is a bank margin spread above the prevailing SIBOR Rate for the final home loan interest rate payable (1M SIBOR + 1%).