Just when you thought that interest rates can’t get any lower, the swap offer rate (SOR), a benchmark interest rate that is commonly used to determine mortgage rates, fell below zero for the first time. The Singapore interbank offered rate (Sibor) is the other benchmark interest rate commonly used in Singapore.
The three-month SOR fell to -0.0119% two days ago.
In theory, a negative interest rate implies that you will need to pay banks to hold your money or banks will pay you to borrow money from them (fat chance on the later occurring in Singapore as the bank will usually have clauses to prevent that from happening). We are living in interesting times.
With interest rates remaining at all time lows, they continue to fuel speculative demand for property. But a low interest rate by itself does not guarantee a booming property market. Recall that Japan had interest rates that were very low for as long as we can remember but their property prices had been on a downtrend all the way ever since the bubble burst.