Still putting your money on interest rates not rising this year...?

Excerpts from a report in Weekend Today:

Banks should take into account potentially higher interest rates in their credit assessments and not assume that the current low cost of funds will last indefinitely, the head of Monetary Authority of Singapore (MAS) said on Friday, as he underlined the need to guard against the risks of asset bubbles.

“Many parts of Asia in particular are vulnerable to property bubbles, not only because of current liquidity conditions but also because many investors believe that, in a growing economy, the property market can only move up,” Mr Heng Swee Keat, the managing director of the MAS, said at the opening of French business school EDHEC’s Risk Institute Asia.

“Many have forgotten how the property markets in the region slumped during the 1997/98 Asian Financial Crisis,” he said.

He said policy makers must leave no doubt of their resolve to tackle the potential build-up of risks and must be willing to take progressively tougher measures, as MAS and other agencies in Singapore had done recently to cool the property market.

Urging banks to continue prudent lending practices, Mr Heng said the MAS will monitor bank activities closely.

If the wife and I are sitting on a big home loan, we should start to worry. The cooling measures implemented so far are "tame" by comparison: they (LTV ratio reduction, increase in seller stamp duties) only hit our pocket once per property transaction. But interest rate increases will hit us month after month until the loan is fully repaid...

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