Interest rates will be on the rise in coming months, limiting the choices for homeowners seeking to refinance their loans, said mortgage specialist MortgageWise. The Singapore Interbank Offered Rates (Sibor), used to set most mortgages here, has risen from around 0.41 per cent in October last year to 1.135 per cent now. With US interest rates set to rise in the months ahead, local rates will also edge up further.
"We think the three-monthSibor will likely hit the 1.2 to 1.4 per cent range by the end of the year", said MortgageWise executive director Darren Goh. That means fixed-rate packages of under 2 per cent a year will soon be a thing of the past, he added.
Board Rate packages - pegged to loan rates determined internally by banks - are also becoming volatile. Consumers should go for more stable options, such as Fixed Deposit Home Rate (FHR) packages.
FHR is pegged to the average of 12-month and 24-month fixed deposit rates. "In an environment where interest is expected to go up, we recommend opting for FHR over Board, and certainly over Sibor," Mr Goh said, adding that FHR is unlikely to be adjusted before mid to late 2016.