The offered mortgage rates are pegged against two commonly used benchmark interest rates. These are the Singapore interbank lending rate (Sibor) and the swap offer rate (SOR). The three-month Singapore dollar Sibor has been at a record low of 0.438 per cent since January, while the three-month SOR has moved between 0.189 and 0.3 per cent since April. It now stands at 0.21 per cent.
The fact that these deals have not been offered to the rest of the market yet and with the marketing kept low-profile, suggests that the banks themselves recognise that it would be counter-productive to engage in an open mortgage war at this time.
However, it may not be too long before this happens, given the global economic situation where at a recent meeting of the United States Federal Reserve, policy-makers discussed "Quantitative Easing Three". And Fed chairman Ben Bernanke said on Wednesday that further stimulus might be needed to help the US recovery.
Quantitative easing is a tool to try to revive the US economy by expanding the money supply via huge purchases of government bonds. If this happens, foreign investors are likely to head back to our region in a big way as they switch out of developed markets, such as the US and Europe, which have recently been spooked by concerns of slowing growth.