June 16, 2013

Philippines and Indonesia most vulnerable to higher interest rates

The Philippines is one of two Asian nations which could bear the brunt of rising interest rates, especially on the property sector, according to DBS. Strong growth, manageable inflation and abundant liquidity have allowed the Bangko Sentral ng Pilipinas (BSP) to keep policy rates at record-lows of 3.5% and 5.5% last Thursday.

DBS however said the scaling down of the US bond-buying program, which essentially means no more cheap money and rise of interest rates in the US, may reverse this any time soon. In a specific gauge of mortgage rates, DBS said the Philippines, which has seen interest rates hit all-time lows, could see annual housing payments rise by 40% once rates return to pre-crisis levels. - WealthSec