Singapore SIBOR rate falls to 0.94% in Nov 2008, lowest since Jul 2004

This article belongs to the Singapore SIBOR rate watch story arc.

On 7 Nov 2008, the 3-month Singapore SIBOR rate fell below the 1 percent mark to reach 0.94%, the lowest level since Jul 2004. What this means to you depends on who you are :

- If you are a borrower, rejoice, especially if you have a SIBOR-linked or SOR-linked home loan. For you, your housing loan interest rate will be coming down.

- If you are a lender, this may be of some help to stimulate further borrowing, but unless interest rates actually go to zero, you might not really be able to count on it as a major factor in this environment of deteriorating economic conditions as Singapore heads deeper into recession.

- If you are a saver, you lose as deposit rates will tend to follow this Singapore inter-bank lending rate downward. Even with inflation easing off a 26-year high of 7.5% to 5-6%, your money is still being inflated away faster than you are being compensated via deposit rates.

Eventually, there will be a trend reversal, but for the meantime, enjoy these low rates as long as you can particularly if you are in the first group. If you want to take on new debt (car loan, home loan, etc), by all means take your chances if you feel you have sufficient job security in this environment. I know I have been calling for a trend reversal but it now looks like this could be occurring later rather than sooner. When it does reverse course, perhaps in, I don't know, the next year or two or so, look out, but before that occurs, you have some time.

In the longer term, watch out for hyperinflation.

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