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1) The Swap Offer Rate (SOR), or
2) The Singapore Interbank Offered Rate (SIBOR)
However, a banker might sometimes offer you a third option: an Internal Board Rate (IBR), often just called a "board rate". Using the IBR means your home loan interest rate will be determined by the bank.
And they can change it as they like, without you getting so much as a sympathetic nod and a "sorry".
SINGAPORE's key lending rates jumped on Wednesday as the Singapore dollar fell sharply to a five-year low on two days of yuan devaluation.
The three-month Sibor or Singapore interbank offered rate, which is used to price home loans, jumped to 0.93450, up 0.05542 from Tuesday's 0.87908. The gain was 6.3 per cent and took the key interest rate nearer to the year-high of 1.02705 on April 9.
Two key interest rates affecting business loans and mortgages have fallen from their 2015 peaks.
But experts say this is likely temporary relief as positive United States jobs data on Friday and a stronger greenback have reinforced expectations of an interest rate hike this year.
The three-month swap offer rate (SOR), commonly used to price commercial loans, fell 25 per cent to 0.84886 per cent on Friday from a year-high of 1.13207 per cent on March 24, while the six-month SOR fell nearly 22 per cent to 1.01130 per cent from a year-high of 1.29498 per cent on March 23.
After a lot of angst over whether Singapore's property market faces a crisis, the city-state's efforts to rein in household debt and home prices appear set for their first test as local rates begin to rise.
"Consumer demand has been quite weak already, weighed by the household debt issue," said Michael Wan, an economist at Credit Suisse."Any incremental rise in interest rates will be more negative for private consumption demand."
The current property cycle bears the following similarities with the 1986-1998 cycle:
1) At the cycle peak, landed properties outperformed non-landed properties and detached houses are the best performer while condominiums are the worst performer.
2) In both property cycles, unlike in the other cycles, prices reached a peak and started to decline in response to property cooling measures introduced by the Government and not due to some external events such as an economic crisis.
I thought it would be interesting to compare and contrast the two property cycles to see what are the similarities and differences and what insights we can draw from them.
The Singapore property market has undergone four property cycles since 1975. The first cycle from 1975-1986, the second from 1986-1998, the third from 1999-2004 and the fourth from 2004-2009. We are now into the fifth cycle which began in 2009.
Getting a new mortgage to replace the original is called refinancing. Refinancing is done to allow a borrower to obtain a different, and even better interest term and rate. The first loan is paid off, allowing the second loan to be created, instead of simply making a new mortgage and throwing out the original mortgage. For borrowers with a perfect credit history, refinancing can be a good way to convert a variable loan rate to a fixed, and obtain a lower interest rate. Borrowers with less than perfect, or even bad credit, or too much debt, refinancing can be risky.
In any economic climate, it can be difficult to make the payments on a home mortgage. Between possible high interest rates and an unstable economy, making mortgage payments may become tougher than you ever expected. Should you find yourself in this situation, it might be time to consider refinancing. The danger in refinancing lies in ignorance. Without the right knowledge it can actually hurt you to refinance, increasing your interest rate rather than lowering it. Below you will find some of this basic knowledge written in order to help you reach your best deal.
Back in 2011, I was convinced banks installed revolving doors just for home loan customers. People refinanced more often than we got to change underwear in NS. It was an industry norm; you’d pick the cheapest loan for three years, and then refinance on the fourth. Now from 2013 onward, it might not be that easy…but you can still save money:
Fearing that interest rates will soon start to rise, more Singapore borrowers are turning to fixed rate home loans.
The prospect of higher repayments has become far more pressing in recent weeks with the United States Federal Reserve's decision to begin cutting back its stimulus spending.
That paves the way for US interest rates to eventually rise, which will inevitably mean they will rise here too, as Singapore's interest rates closely follow those in the US.
A rise in short-term interest rates would hurt home loan borrowers as many are on floating rate packages that are linked to these rates.
[SINGAPORE] Thousands of HDB homeowners are turning to DBS Bank for a mortgage product that guarantees savings.
Those who took up a POSB HDB loan when it was launched in April could be looking at savings of as much as $1,600 by next month, calculations from DBS showed.
According to Lui Su Kian, DBS's head of deposits and secured lending, the POSB HDB loan has attracted "five times more new customers than a year ago", making up for some of the slack in the private-home loan market.
Spotlight on singapore private residential market
The government's measures to cool the residential property market have had significant impact: Transaction volumes have plunged, new home loan sales have contracted and loan-to-value (LTV) ratios have improved.
"The series of property-related measures taken by the government over the past few years has dampened momentum in the market," said the Monetary Authority of Singapore Financial Stability Review 2013 yesterday.
But the government remains vigilant as price levels remain high, it said.
Singapore's central bank warned that rising global interest rates could weigh on household and corporate debt and pose risks for banks in the city-state.
A 3 percent increase in mortgage rates would boost the share of overly indebted households to as much as 15 percent from 10 percent now, the Monetary Authority of Singapore MAS said in its annual financial stability review today. Banks also need to guard against credit quality deterioration as rates increase after Singaporean companies’ median debt-to-equity ratio rose to 39 percent at the end of June, the authority said.
While Singapore's trade dependent economy has had a tough 2012, even teetering on the brink of a recession earlier this year, the city state's residential property market has remained robust, with prices among the highest in the world.
Private home prices in this Southeast Asian financial hub have risen a whopping 56 percent since the global financial crisis, and most analysts expect this upward trajectory to continue into the new year, even as the market faces a drop in sales volumes amid a somber growth outlook.
Singapore's private housing market has seen months of double-digit declines in sales, including a 44 percent month-on-month fall in November, in part due to a number of cooling measures introduced by the government – yet prices have remained firm.
