More homeowners who took housing loans from banks are now looking for refinancing options. Loan specialists said they have been getting more inquiries since the recent spike in SIBOR (Singapore Interbank Offered Rate).
Homeowners – whose mortgages are tied to SIBOR – are now facing higher monthly payments. One of those affected is 30-year-old engineer Lai Ming Kwan, who bought an executive condominium with his wife two years ago and he opted for a bank loan that is tied to SIBOR.
With the benchmark rising sharply in recent days, Mr Lai is concerned about how it will affect him. He said: “They predicted that it will stay at 0.3 per cent to 0.4 per cent for a few years. I did not expect it would go up to so high … SIBOR is increasing so fast that my pay cannot catch up with the financing rates.”
Both Mr Lai and his wife are working and have a 16-month-old child. “Expenses, lifestyles will have to change a bit because I have to save up more to contribute to the housing loan … so there’ll definitely be an impact, maybe less shopping. With the child coming up, there is also school fees, childcare fees, so the depletion will come from my savings. Having a second child will also mean more expenses,” he added.
Some homeowners, like Mr Lai, cannot look into other financing options yet because their loan deal has a lock-in period, which requires them to stick to the same bank for a couple of years. However, loan specialists said that those whose lock-in periods are up are already starting to look at refinancing options. This can include looking for a housing loan with fixed interest rates instead of being tied to one with variable rates.
One mortgage consultancy said that it has received many inquiries on refinancing in recent days, about 30 per cent more when compared to last year. Mr Sean Lim, the mortgage consultant head at iMoney, said: “They want to know what is happening in the market … So they are taking time to digest and understand what is happening in the market.
“The pace of increment did catch me by surprise. But it is also half-expected. The trend has been going up slowly over the last six months. Looking at the market trend, it will continue to go up.”
With interest rates rising, banks can be expected to review their mortgage rates and plans. Analysts said that potential home buyers or those who are hoping to refinance their housing loans should choose a package that best suits their financial needs.
Source: http://www.channelnewsasia.com/news/singapore/more-homeowners-look-to/1575034.html
