The second biggest economy in the world - The European Union has announced its decision to cut its lending interest rate this week, saying it had made progress in tackling inflation with The European Central Bank (ECB) cutting its main interest rate by 25 basis points from an all-time high of 4% to 3.75% on Thursday, 6 June 2024.
Canada also announced the cutting of its official lending interest rate on Wednesday.
The European Central Bank (ECB)'s move comes as voters head to the polls for EU-wide elections over the next four days, with the outcome expected to reflect people's unhappiness over cost-of-living pressures.
The president of The European Central Bank (ECB) - Christine Lagarde said the outlook for inflation had improved "markedly", paving the way for the rate cut. However, she warned that inflation was likely to remain above the bank’s 2% target “well into next year”, averaging 2.5% in 2024 and 2.2% in 2025.
"It is likely the US Fed Reserve may follow suit in the 4th quarter of this year to cut interest rates by at least 25 basis points as their November elections is just around the corner. From past history, we usually see an interest rate drop before elections in America and Europe." said real estate professional Kiwi Lim who believe that The European Union is beginning to reverse a historic series of rate increases because of elections.
"The drop in Europe's interest rates may not impact Singapore's real estate market as much as a drop in the US Fed Reserve rates if it does happen in the 4th quarter of this year. If the home mortgage rates drop in Singapore, buyers may be more inclined to buy resale properties as they will save on the interest rates and that in turn will also lift up new condo launches in the market, like the upcoming mega condo project in Serangoon - The Chuan Park, which is highly anticipated", said Kiwi Lim. who has been helping his clients navigate the real estate market for more than 10 years.
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