Tags: district 9, Marina Bay Sand, Martin place residences, River Valley, singapore condo
Tag Archives: district 9
What you need to know about SOR (Swap Offer Rate)
6 SepWith the SGD Swap Offer Rate (SOR) hitting negative fixing for the first time in history, it has been in the limelight and is being widely debated in the industry. Market players rush to implement floor rates, clients’ bargain hunting for SOR pegged housing loans without truly understanding the fundamentals and nature.
SOR is a complex function of USD/SGD FX forwards, USD/SGD spot and USD LIBOR. It is the level of interest rate that make investors indifferent between placing a SGD deposit or a USD deposit in the US after factoring for potential foreign exchange gains/losses. This erratic movement was mainly due to the drastic fall in the FX forwards, and not the other two parameters. The market is usually very sensitive initially and it seems that the market had already priced in the negative expectations in the last couple of weeks, with the 3m SOR range bound between positive and negative region currently.
The market can be corrected should the MAS intervenes in the open market and buys USD/SGD forwards. The belief is that the continuation of negative SOR rates might fuel the property bubble that the government is trying to avert. However, MAS had followed with statements that they would not intervened in the open market. It could be expectations that the market would correct by itself after sentiments had stabilised.
Watermark at Robertson 