Borrowing rate stays low at 1.2% despite higher US yields: MAS

The three-month compounded SORA remained below its 10-year average of 1.5%.

Borrowing costs have remained relatively stable despite higher US Treasury yields, with the three-month benchmark borrowing rate staying low at around 1.2%, according to the Monetary Authority of Singapore (MAS).

The three-month compounded Singapore Overnight Rate Average (SORA), a key benchmark for domestic loans, remained below its 10-year average of 1.5%.

"Singapore's borrowing costs have remained broadly in line with historical levels," said Chee Hong Tat, Minister for National Development and Deputy Chairman of MAS.

The yield on 10-year Singapore Government Securities (SGS) stood at 2.5%, compared with its 10-year average of approximately 2.2%.

The yield discount between 10-year SGS and US Treasuries widened from around 170 basis points in January 2025 to 250 basis points in September.

Chee, in a parliamentary reply on 7 October, said Singapore's interest rates generally track those of major economies but have risen less than those in other jurisdictions.

He partly attributed this to the country’s strong fiscal fundamentals, which have supported continued demand for government securities.

"Credit growth remains firm, credit quality is sound, and banks are well capitalised," Chee added.

MAS stress tests also indicated that businesses and households were generally financially sound and able to manage higher borrowing costs.

However, Chee urged borrowers to maintain adequate liquidity buffers and account for the possibility of further interest rate increases.

The government has also increased its risk-sharing proportion for eligible Enterprise Financing Scheme loans from 50% to 70% in September to improve businesses' access to working capital and project financing.

The authority also continues to work with financial institutions to monitor borrowers' repayment performance and facilitate early intervention when signs of financial stress emerge, Chee said.

On Singapore's reserves, he added that a gradual increase in yields would remain manageable given the country's diversified investments and long-term investment horizon.