Buying property in Singapore is expensive enough as it is, and the soaring interest rates aren’t helping. Act now if you want to avoid feeling the pinch of servicing higher mortgage loans.
Words by Calvin Yeo
If you managed to refinance your home loan to a fixed rate last month, you would probably have locked in a fairly good deal for yourself for a couple of years. Unfortunately, most of the local banks have been quick to react to adjust the fixed rate home loans upwards so that it is not too far off from the floating rates.
Are Fixed Rates Attractive Now?
[Free Ebook] How should you invest your first $20,000?
We asked 14 Singapore finance bloggers to share what they would do if they could go back in time and invest their first $20,000. They can no longer rewind time, but you can learn from their experience and hopefully start with a better footing.
However, even with the new fixed rates, some of the banks’ rates still seem to be a better bet than the floating rates. With the Singapore Interbank Offered Rate (Sibor) and Swap Offer Rate (SOR) shooting up to above 1% — a record level we have not seen since 2008 — some of these fixed rates are actually quite similar to the floating rates.
You can view and compare the latest effective rates easily at Compare Home Loans.
How about Internal Board Rates?
So far, internal board rates have always been an unknown factor as nobody knows exactly how these are determined. The most transparent board date would be the DBS Fixed Home Rate, which is based on fixed deposit rates. However, most of the other board rates do not have a clear mechanism as to how they are determined. Locking into a board rate loan may run the risk of being stuck with a relatively high interest rate, although most bankers will try to convince you that their board hasn’t changed for the past 5 years. (But neither has Sibor or SOR until recently!)
Get the Fixed Rates before They Go Up Further
The banks are not sitting idle; in fact some of them are not only increasing the fixed rates, but may be removing them entirely from the loan offering. So you should definitely act now to refinance your home loan if you haven’t already done so!
Standard Chartered has just mentioned that their 1.78% fixed interest for 2 years is only valid until this Wednesday 13th April. Given that the Sibor rates are generally about 1.8% and higher, this is actually a pretty decent deal.
Other noteworthy mentions are: Maybank, which has fixed 1.78% and 1.98% interest for the first 2 years with a 2-year lock in; and OCBC, which also has a relatively attractive fixed rate of 1.98% for the first 2 years. (It was 1.88% just a few weeks ago, which should give you an idea of how quickly the rates can fluctuate.)
Remember, this is just the beginning of the interest rates hike, and it doesn’t look like it’s likely to stop.