One of the after effects of the government http://investmentmoats.com/budgeting/singapore-savings-bonds-ssb-start-issuing-september/ is that with a viable product for the consumer masses, with a limited money supply, the competition will be more.
Straits Times today tallied how the banks are offering higher fixed deposit rates in light of this competition from SSB.
Looks attractive and affordable.
Compare this to the prevailing SGS Bonds yield to maturity:
The fixed deposit come in competition with the sgs bonds in the 1.1 years range, which is roughly 0.66%. Looks like they are upping it.
But like what analysts say, they may be trying to offer so much more that folks forget what is good about the Singapore Savings Bonds.
From the table you can see that the rates for the 9-10 year duration have moved up! it was 2.3% a few months ago. Now its 2.6%.
This is in Mar 30th 2015:
That is as high as insurance savings endowments (take a look at some of the past insurance endowment returns i tallied here)
What about housing loan rates?
Now that the cost of deposits is higher, the question is how would this affect housing loan rates? Some how these are interlinked?
For those that are borrowing now, would floating rates be affected? I think not.
But those on bank board rates will be a different story.
What do you guys think? Would you go for these fixed deposits, or the Singapore Savings Bonds. Would your current loans be affected?