Why can't HDB use this rate for their housing loan, - as Sibor rate is s much cheaper

Sibor slides further, almost hugs the floor. Why can't HDB borrows
from Sibor market and charge
a small adminstration fee on it and to lend to HDB borrowers? This
will save a lot of money to Hdb buyers. After all HDB money used in
building HDB comes from taxpayers and CPF money .


http://business.asiaone.com/Business/News/My%2BMoney/Story/A1Story20101018-242831.html
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Mon, Oct 18, 2010
The Business Times

Sibor slides further, almost hugs the floor

By Conrad Tan

INTERBANK rates here fell by the most in nearly six months yesterday,
putting pressure on banks' lending margins, after the Monetary
Authority of Singapore's (MAS) surprise move on Thursday to allow
faster gains in the Singapore dollar.

The three-month interbank offered rate for Sing-dollar loans, or
Sibor, fell to a new low of 0.47014 per cent yesterday, from 0.49667
per cent on Thursday - the biggest one-day drop since April 26.

The one-month Sibor, which had stayed at 0.37500 per cent since April
20, fell to 0.34792 per cent yesterday. The interbank rates for six-
month and one-year Sing-dollar loans also fell - by the most since
January last year - to 0.59375 per cent and 0.80556 per cent,
respectively, Bloomberg data shows.

On Thursday, MAS widened and steepened the trading band for the Sing
dollar, making room for further gains to fight inflation.

Its actions sent the currency soaring to a record high against the US
dollar, but also put immediate pressure on interest rates here,
forcing them down. Investors accept lower interest on Sing-dollar
assets if they expect more gains from currency appreciation.

'By fuelling expectations for faster Sing-dollar appreciation, the
slope steepening drives short-term Sing-dollar interest rates lower,'
Citigroup economist Kit Wei Zheng said in a report yesterday.

The lower rates will make it even harder for banks here to boost their
net interest income from lending - their biggest source of revenue.

Meanwhile, savers who are already earning almost nothing on their
deposits could soon earn even less.

Yesterday, DBS Group cut the interest that it pays on the first
$100,000 in POSB savings accounts to just 0.1 per cent. Previously, it
paid 0.125 per cent for the first $50,000 and 0.25 per cent for the
next $50,000.

Near-zero interest rates and poor growth prospects in the United
States and Europe are prompting investors to seek higher yields
elsewhere, and some analysts have warned that the prospect of faster
Sing-dollar gains could attract even more money into Singapore,
pushing up the prices of property and other assets.

Yesterday, the Sing dollar gave up some of Thursday's gains to trade
at around 1.2950-1.2980 against the US dollar. At 7pm, one US dollar
bought 1.2965 Sing dollars, compared to 1.2955 a day earlier.

But the US dollar continued to slide against other major currencies,
after the MAS move on Thursday spurred widespread buying of Asian
currencies in anticipation of further gains.

Traders were also awaiting a speech by US Federal Reserve chairman Ben
Bernanke yesterday, looking for clues about how much money the central
bank plans to pump into the economy through asset purchases.

The US Treasury was also expected to deliver a twice-yearly report on
China's currency policy that could stoke tensions between the two
governments.

At 7pm, the dollar index, which measures the strength of the US dollar
against six major world currencies, was down 0.2 per cent at 76.516 -
extending its fall this week to one per cent.

The index has dropped 4.9 per cent since Sept 21, when the Federal
Reserve signalled that it could resume purchases of US government
bonds and other securities to support the economic recovery.

The war of words over currency policies continued yesterday: China hit
back at Japan's Finance Minister Yoshihiko Noda, who had earlier this
week criticised both China and South Korea for keeping their
currencies weak, making their exports relatively cheaper than Japan's.

The yen has been trading near its highest level in 15 years against
the US dollar, prompting Mr Noda to repeat yesterday that the
government would intervene again to weaken the yen if necessary, after
doing so last month.

This article was first published in The Business Times.




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