SINGAPORE (March 30): Investors have " overdiscounted" headwinds facing Singapore-listed property developers such as Wing Tai Holdings  and CapitaLand , whose current share prices offer deep value, according to UOB Kay Hian.

One such headwind is rising mortgage rates.

Housing loans are becoming more expensive following the sharp rise lately in the Singapore interbank offered rate (Sibor) and the Swap Offer Rate. Sibor has gone up to more than 1% from 0.4% in the past four months.

Still, affordability remains manageable, according to UOB Kay Hian analysts Vikrant Pandey and Derek Chang, who estimate that every one percentage point rise in interest rates will lead to a $500 increase in monthly mortgage payments for a $1 million, 25-year housing loan.

" Those who are able to rent out their units will continue seeing positive carry as rental yields of 2.5% to 3.5% exceed mortgage rates of 1.5%-2%," they wrote in a note.

The total debt servicing ratio used by banks offers another safeguard, they said, as it factors in a much higher mortgage rate of 3.5% in assessing loan eligibility while actual loans charge lower rates of 1.5% to 2%.

" This leaves room for another 100- to 150-basis-point rise in mortgage rates before the borrower' s ability to repay is impacted," they noted.

That said, property investors are finding it harder to rent out units as more completed homes are released into the market and the number of foreigners in Singapore decreases, pushing up vacancy rates, they said.

" Another 100-basis-point rise in Sibor, or alternatively a 30% drop in rents from here on, would result in the positive carry situation turning into a negative carry situation."

UOB Kay Hian has " buy" calls on Wing Tai, CapitaLand, GuocoLand , Ho Bee Land  and OUE and respective price targets of $2.50, $4.08, $2.48, $2.68 and $2.80.