U.S. 10-year yields have been rising steadily (from 1.30% to 1.60%) in recent weeks in anticipation of Fed’s tapering off on bond purchases starting next month in November.  In Singapore, we’ve seen some banks starting to adjust their 3-year fixed rates up in view of rising funding costs for longer tenors.

At MortgageWise, I am glad to report that over the last few months, we have successfully engaged with quite a number of our existing clientele as our CRM platform allows us to alert those with lock-in expiring in the 1^st quarter of 2022 – giving them that first-mover advantage to lock down fixed rates today at a historical low of 1.05% for 2-year and even 1.15% for 3-year! Whilst they still can.  Before more banks start to revise up their fixed rates by the time they call for repricing.  Once again, it’s a testament to the capabilities of our CRM platform and how clients save much more over the long-term with a trusted broker.  More so than short-term gains like cashback promised by many. 

Now, whether yields will continue to rise from here and hit the all-psychological-important level of 2% will depend on a few things.  First, will there be a drop off in demand when Fed is certain to start shaving off US$10b and US$5b in Treasuries and mortgage-backed securities (as indicated in the latest release of Fed meeting minutes) purchases per month from November?  This tapering will likely run for 8 months until June 2022 after which Fed will no longer be doing bond purchases or money-printing. It will be hard to imagine, in the absence of such a big purchaser of Treasuries, that bond prices will hold.  Unless money managers start to reallocate away from equities into safe-haven assets in anticipation of stock market crash. That does not look likely to me.  This means there will be more pressure for bond yields to rise once tapering gets underway.  Second, new virus variants or other economic crisis to spill over and wreak havoc on the recovery so much so as to reverse Fed’s tapering plans.  At this moment that is a question mark.  We do have a brewing financial crisis in China (Evergrande) that’s still unfolding.

This latest surge in yields may well turn out to be yet another roller-coaster ride for monetary tightening.  The last time it happened just few months ago yields dropped back to 1.20% level soon after.  No one knows.  What is certain is this – we are indeed at a rock-bottoms all-time historical-low for interest rates in Singapore, whether you are looking at fixed or floating rates.  And the only way for rates to move is either up or flat.  It has remained so for most parts of 2021 but that picture is looking likely to alter very soon with the commencement of Fed’s tapering.  So, whether or not rates might suddenly roll back again, it does make perfect sense for anyone with an upcoming mortgage renewal to lock down the lowest historical fixed rates now.

We have successfully engaged with quite a number of our existing clientele as our CRM platform allows us to alert those with lock-in expiring in the 1^st quarter of 2022 – giving them that first-mover advantage to lock down fixed rates today at a historical low of 1.05% for 2-year and even 1.15% for 3-year!

This does not change our view that floating rates will still remain relatively flat or subdued not until such time when Fed finally lift off (rate hikes) by 2H of 2022, if it happens.  For this reason, we position 2023 as a cycle-turning year in the interest rate cycle.  Hence, a 2-year fixed rate home loan or a floating rate home loan package with a 1-year lock will set you up nicely to be ready in 2023.  Still, we understand there’s quite a big segment of home owners who prefer the stability and peace-of-mind that comes with a 3-year fixed rate in view of Fed’s tapering.  That’s not wrong especially when you can still lock down 3-year fixed at 1.15% which is not very far away from floating rates.  This gap between fixed and floating will likely widen over 2022.

Whatever is your view – 2-year or 3-year commitment period, the imperative is to take action early. Speak to our dedicated team of mortgage consultants who will watch the interest rate cycle and watch your back too.  Better yet, work with us long term and benefit from our expert viewpoints, CRM platform with early mortgage reviews throughout each cycle-turning moment to reap maximum savings over your 30-year loan tenure.

Compare Singapore home loan rates using a comprehensive, fast and free service from MortgageWise.sg, in operations since 2014.  Be it to refinance home loan, buy your next Singapore condo , or even explore commercial property loan, speak to our dedicated team of mortgage consultants at your service today!