Homeowners in Singapore have been used to bank loan interest rates within the sub-2 per cent range over the last two decades. For almost 20 years, bank loan interest rates were lower than the interest rate for HDB housing loan, which is pegged at 0.1 per cent above the prevailing CPF Ordinary Account interest rate.
With interest rates on an uptrend, this means that homeowners need to add more buffer into your mortgage savings. Having more buffer gives you more flexibility to decide on your next mortgage move. If you check out some of the latest interest rates on floating rate bank loan, they are still way below the 2.6 per cent interest rate that HDB housing loan is charging. For instance, OCBC’s three-month SORA pegged bank loan is at around 1.79 per cent on a three-year average. You will find a similar rate for DBS and Standard Chartered three-month SORA pegged bank loan at 1.84 per cent on a three-year average.
Choosing between floating or fixed interest rate is the other big dilemma for homeowners besides choosing between HDB housing loan and bank loan. As mentioned earlier, floating interest rate is still relatively low compared to fixed interest rate.
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Source: ChannelNewsAsia - 🏆 6. / 66 Read more »