Interest rates at the bank have fallen to the lowest level as compared to the trend in recent years, and with this, more people are looking for mortgage refinancing opportunities.
Banks in Singapore have lowered their loan interest rates, especially that are attached to the Singapore interbank offered rate (Sibor). With this initiative, homeowners can secure their mortgages are more favourable rates.
Note that Sibor is a standard term used for the rate at which banks keep on borrowing from one another. But as coronavirus pandemic has disturbed the economy activities all over the world, this rate is now trending down for the next few months.
This rate was at the highest point in the month of May last year with a mark of 2 per cent after the global financial crises of the year 2008. However, due to ongoing crises from the last three months, it has now fallen to 0.56 per cent by this month.
This considerable change in the market happened after the announcement of US Federal Reserve regarding the reduction of benchmark interest rates to zero in the month of March so that the economic curve of Covid-19 pandemic can be flattened out. Earlier, the US Fed and Sibor interest rates were closely connected.
The managing director of Fintech. Mr Paul Wee was recently stated that this reduction in the interest rates might help homeowners to deal with the economic crises by balancing their home loan interest rates and mortgage repayment term.
He also added that the rule of thumb says that floating interest rates for loans are more suitable for the environment with declining interest rates, whereas fixed-rate loans work better in the opposite conditions.
DBS Bank, United Overseas Bank and Standard Chartered Bank of Singapore recently told the media that they were receiving plenty of refinancing inquiries from the public from the past few months.
The banks also revealed that with the new announcement for the interest rates, they are receiving a mixed number of refinancing options for Sibor pegged packages as well as for fixed loan terms.
Another spokesperson said that Maybank had lowered the mortgage loan interest rates somewhere between 0.35 to 0.25 per cent in the past three months. As a result, a wide range of customers is switching their loans within Maybank.
Tok Geok Peng, DBS head for secured lending, recently said that they are receiving various applications regarding fixed loan rates due to rising demands for stability amid the pandemic attack.
Ong Ye Kung, a board member at Monetary Authority of Singapore on 26th May said in the Parliament that present new housing loan rates are fluctuating between 1.8 to 1.4 per cent as compared to the 2.3 to 1.8 per cent range of the last year.
However, Mr Wee still warned people that they should look for maintaining personal cash flow instead of jumping for the refinancing option because that is a more important concern for the current financial conditions in the market.