THE FED JUST DID THE ONE THING NOBODY WAS PREPARED FOR
For two years straight, the Federal Reserve had been cutting rates. Every investor who bought Singapore REITs in early 2026 was betting on that trend continuing. On September 17, it reversed. The FOMC voted unanimously to raise rates by 25 basis points, pushing the federal funds rate to 3.75 to 4.00 percent. It is the first hike since July 2023.
Fed Chair Kevin Warsh did not soften the blow. He told reporters inflation remains elevated and that the hike was meant to support a timelier return to the Fed's 2 percent target. Markets had priced in a hike, but pricing it in and living through it are two different things.
SINGAPORE'S FAVOURITE INCOME TRADE JUST GOT MORE EXPENSIVE
If you own S-REITs, you already know the pain. The FTSE ST All-Share REIT Index was already down 8.2 percent for the year as of early September, even while the broader Straits Times Index was up 24.6 percent over the same stretch. That gap alone should have been a warning sign.
Higher rates hit REITs in two places at once. Borrowing costs go up, which eats into the income they can pay out. And when T-bills start yielding more, REIT dividends stop looking as attractive by comparison. The operating businesses behind most S-REITs are still fine. It is the valuation math that just got harder.
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YOUR HOME LOAN IS ABOUT TO GET BIGGER
This is the part that hits people who have never touched a brokerage account. Singapore's three-month SORA, which many floating-rate mortgages are pegged to, has already climbed to around 1.2 percent from about 1.0 percent at the end of May. A Fed hike this size tends to filter through to local borrowing costs over the following weeks.
If your mortgage resets soon, it is worth checking whether locking in a fixed rate now makes more sense than riding the float. This is not a call to panic. It is a call to actually look at your loan statement instead of ignoring it.
THE SAFE MONEY JUST GOT SAFER, AND MORE BORING
Here is the flip side nobody talks about enough. Singapore's 6-month T-bill yield has already pushed up to around 1.7 percent, and the 10-year SSB average has climbed to roughly 2.25 percent. For anyone sitting on cash, that is a genuinely better deal than it was a year ago.
It will not make headlines the way a hot stock does. But higher risk-free yields are the quiet reason REITs are struggling to compete for investor dollars right now. Boring and safe just got a little more rewarding, and that matters more than it sounds like.
WHERE THE SMART MONEY IS ACTUALLY HIDING RIGHT NOW
Retail investors have not stopped buying. Since the STI's record high on September 4, Singapore retail net bought S$888 million worth of stocks, and DBS, OCBC and UOB alone made up roughly two-thirds of that. All three banks posted double digit return on equity in the first half of the year, and OCBC even reported a record profit with a 15 percent dividend increase.
That is not a coincidence. Banks tend to benefit when rates rise, since they earn more on the spread between what they lend and what they pay depositors. While REIT holders are nursing losses, bank shareholders in Singapore are having a very different September.
With 20 years of investment expertise, Caleb Gan is a seasoned professional in stock trading. The hard work and dedication were recognized when his partner and him were featured on Singapore TV Channel 9's MoneyWeek, a prominent financial program. He's also had the privilege to share insights on radio stations like 93.8Live, Capital 95.8FM, and 96.3FM through live interviews about stock market investments. Beyond that, he's also the co-founder of NDU System, where he continues to help others navigate the world of trading.
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