For some concerned homeowners, the recent headlines of rising interest rates and housing loans have induced even more stress. And it’s not ending here: They will have to brace themselves for higher mortgage repayments as local banks continue to raise interest rates for home financing solutions. In fact, Singapore home loan rates have just hit a new high of 3.08% with a latest move by one of the biggest lenders, UOB1.
The lenders are taking their cues from the United States Federal Reserve, which has made three rate hikes this year to combat surging inflation. In fact, experts expect mortgage rates here to go up further as Fed officials have indicated at the possibility of additional rate hikes.
Being a small and open economy, Singapore is greatly affected by global movements and market changes, particularly of those in the US. These factors also impact the Singapore Overnight Rate Average (SORA), a benchmark that floating-rate home loans in Singapore are pegged to. To draw an illustration, it was reported that the three-month compounded SORA doubled from 0.32% in May to about 0.65% in June2.
With housing being one of the priciest “essential” purchases for the average Singaporean, it would also mean that a mortgage loan would probably be one of the largest loans that you take on in your lifetime. Here are some tips I would like to share for homeowners who are feeling the immense pressure:
Be aware that you can use cash or your CPF for repayments.
Borrow within your means; do not take on heftier debt than you can afford to repay.
Consider refinancing every few years to manage your mortgage loan and other financial responsibilities.
For these solutions above, I would be happy to share my experience in handling some tricky situations for my clients and how I helped them through the tough spots. Do connect with me anytime for a personalised discussion.