Just read an article in the "Today" newspaper that lending
interest rates in Singapore are now negative and its a good time to
take a home loan. I think its an article by UOB.
I am not very savvy financially but i guess this negative interest
rate is because of the fact that the mortgage rates (3-4%) offered
by the banks is well below the inflation(or expected inflation)
rate (4-5%). I can understand the effect of this from the banks
point of few. When they lend money and charge a mortgage rate below
inflation rate they are actually loosing money. But i am not really
able to understand this from the borrowers point of view.
Say, i borrow an amount from the bank. I still need to pay the
mortgage rate to the bank. When this mortgage rate is lower than
the inflation rate how exactly does it affect me? and why exactly
this is a good time to take a mortgage loan?
Please enlighten.......