Christian Ronaldo scores goal - best attack strategy for mortgages

Scoring Hat-Trick In Mortgage!

In the run-up to the much anticipated June rate hike by US Fed, fixed rates have now moved up for both DBS home loans and UOB home loans since the start of the month.  OCBC moved up their fixed rate even earlier.  The fixed rate home loan packages from the three local banks are now as follows:

fixed rate home loans jun 2018

Note that UOB still has a direct-to-bank promotional package of 2-year fixed rate at 1.85% on their website which ends by 21 Jun, and which comes with a $500 Tangs voucher for loan above $300,000 (note this gift value must be deducted from the loan for purchase cases).  Incidentally, we are likely the only mortgage broker in town that even highlights this to all our clients, as such promotional gifts are excluded for cases referred to the bank by a broker.  We do that as we have operated as a “full-transparency” brokerage firm from day one, working for the long-term benefit of all our clients.

Of course, these are not the only fixed rate home loans out there as we have more than a handful of very active mortgage lenders in the market.  However, as the big three local banks command the lion’s share of the market, most would like to find out what they offer first.  Click below to access the Top 10 lowest home loan fixed rates available in the market at this moment.

Compare All Latest Rates 2020

So just how exactly do you score a hat-trick in mortgage?  By locking down the lowest possible fixed rate for the next three years in a row before this rate breaks out above the 2% mark!

Understand that with more than 80% share of the mortgage market as well as being the net lender in the interbank, the local banks always take the lead in setting the direction of interest rates.  We believe the big banks are always proxy to what is going on in the money market and the fact that they have made the move to hike fixed rates to 2% range tell us how is the liquidity situation right now and how they anticipate cost of funds to move over the next few months.  Hence, we are expecting the rest of the players in the market to play catch-up soon and move up their fixed rates to 2% range.  In short, this “window of opportunity” for one to act now is not going to remain for too long.

For those who have been watching interest rate movements, the question that comes to mind now would be how long this upward trend would stay on intact? Would there be a similar U-turn like back in 2016 where 3-month SIBOR hiked to 1.25% at the start of the year but only to tumble all the way back to sub-1% soon after?  Against the backdrop of a global economic recovery not just in the US, the picture might be quite different this time round.  Interest rates for home loans in Singapore might finally break the 2% barrier convincingly and stay up in the 2%-3% range by 2019.  This is in-line with our current forecast for 3-month SIBOR to hit 2% by December this year once Fed hikes the benchmark funds rate at least two more times this year to reach a range of between 2% and 2.25%.  And if SIBOR indeed reaches 2%, what do you thnk would be fixed rates in the market?  (hint: current 3-month SIBOR is at 1.50% and the lowest 3-year fixed rate is at 1.82% average for 3-year period)

Compare All Latest Rates 2020

World Cup kicks off in just four days.  How about scoring a hat-trick for yourself before the first match even kicks off by locking down a 3-year fixed rate at below 2% still?  Given that the historical mortgage rates in Singapore over the last 30 years is over 4% (see the 30-year trendline of 3-month SIBOR), no one will dispute that to be able to lock down at below half that rate is indeed a hat-trick.  In fact, for those who are comfortable servicing a higher monthly repayment, I would say this could even be the final chance for one to lock down a cheap source of funds for investment by doing a cashout on an equity term loan.  In a recent interview with CNBC’s “Squawk Box” in May last month, this is what Warren Buffet has to say about the state of the market right now: “If I had the choice between buying the S&P 500 index or buying the 10-year U.S. Treasury, 30-year U.S. Treasury, it wouldn’t take me a nanosecond to go into stocks.”  He also refuted: “This is not one of those times” to concerns that U.S. stocks have soared to record highs in recent years creating another bubble.

And now to make the hat-trick even sweeter if you decide to gear up on your loan to go above $500,000 (only for private properties) we have just launched our Zero-Cost refinancing home loan feature for all MortgageWise clients.  There will be absolutely no out-of-pocket expenses (we will offset it for you) if your property valuation is up to $1.5m and when you choose to refinance through us to one of the five major lenders, subject to finer terms and conditions.  Even for those with bigger properties, the additional out-of-pocket is usually just between $50 to $200.  Do speak to our consultants if you like to score this hat-trick!

Since 2014, has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest trends in the industry, providing useful mortgage tips, and making sense of rate movements. We aim to build trust with clients for longer term partnership and not just do product-pushing for a one-time deal unlike bankers. That’s why we always present “whole-of-market” perspective including packages that banks do not pay us. That’s why many have chosen to work with us in the end notwithstanding the sheer number of brokers and agents out there.

Compare All Latest Rates 2020