The economy is in continuous progress and even though we can’t see them, changes occur on a daily basis. Sometimes, those changes are for the best, but in this particular case, they’re not.
Since last month, Singaporeans have become extremely uncomfortable due to the increasing interest rates perceived on mortgages. Towards the end of October, the interest rate on a classic fixed-rate loan was about 1.67 percent.
As we speak, that exact same rate is above 1.80. Needless to say, this is definitely something to worry about, especially for Singaporeans who had thoughts of purchasing houses in the near future.
Why Is This Happening?
Before we answer your questions, we must mention that all three of Singapore’s main banks have taken on this trend and have increased the interest rates on their mortgages.
Of course, we’re talking about: The Development Bank of Singapore (DBS, in short), Oversea-Chinese Banking Corporation (OCBC) and UOB, the United Overseas Bank.
So, to get back on the right track: why are interest rates suddenly sky-rocketing? Well, it’s a worldwide trend. Interest rates on mortgages are a reflection of what’s happening on the financial market at large.
Therefore, it is not really the bank’s fault that interest rates are soaring. They are compelled to increase them in order to make a profit.
What Loans Are Affected?
Unfortunately, both fixed-rate and floating-rate mortgages have been subjected to increases in the interest rates, which makes it so much more inconvenient for Singaporeans to get good deals.
Interest rates have jumped from 1.3% to 1.6% (floating rate, OCBC) in a matter of months; others jumped from 1.65% to 1.75% (fixed rate, same bank) in the same timespan.
While this doesn’t look like much, it will definitely make a difference in your wallet once you’ve actually taken a mortgage. Little figures always amount to big numbers when huge amounts of money are involved.
Obviously, the CEOs of the banks were asked why rates are continuously increasing. They summoned the fact that they’re merely following in the footsteps of the global market. As difficult as that might be to believe, it’s true.
What Can You Do About It?
If you want a mortgage, this is the time for you to act on it. Sadly, this might just be the beginning. If interest rates continue to grow on a monthly basis, it will be almost impossible to get a good deal.
At the moment, what you should do is to quickly hunt the best offers you can get. The CEOs of all the major banks have recommended people to do the same thing.
All of this was probably caused by the surge in the price of the euro, which could hint towards more serious trouble with the economy in 2018.
If you want a new house or you want to refinance your previous mortgage, the time to do that isn’t tomorrow or two weeks from today: it’s now. If you don’t do it, you might live to regret your decision.
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