SIBOR is generally more stable while SWAP tend to fluctuate more. However 3-month SWAP has recently stayed consistently lower than 3-month SIBOR for an extended period of time. SOR is also very reactive to currency exchange rates.

Which bank offers the best home loan deals?

Interest rates and spreads are not all that matter. Don't ignore the closing costs involved. Different banks can have different customized home loans for you. Don't be surprised if you will save more on a home loan that charges more interest because of the lesser closing costs involved. This is especially so if you know that you will refinance your home loan as soon as the lock in period has expired.

HDB loan or bank housing loan?

Our opinion is to always take a HDB concessionary loan if you are eligible for one. One of HDB's objectives is to to provide affordable housing for the people. While a bank is profit driven.

Break Even Point

The break even point of a housing loan refers to how long a borrower must retain a loan for interest savings to equal the initial fees and costs.

Break even points are most relevant when comparing between home loans.

For example, loan A might have a higher interest rate but lower closing costs than loan B. Should a borrower sign up for loan B, the break even point will be the point where interest savings make up for the extra processing and closing fees compared to loan A.

Any point forward beyond the break even point will be a net profit against loan A.

It can also be very useful when homeowners are considering refinancing to save on interest.

For example, a homeowner might come across a very attractive mortgage at 2% lower than his current loan. But refinancing to the new lender will mean incurring underwriting costs, and also a redemption penalty.

However, a 2% cut in this market can be too tempting to ignore.

In this case, the homeowner should calculate the break even point of the new loan to determine how long he has to keep it in order for interest savings to make up for the costs and expenses incurred for refinancing.

If the breakeven point is within a year, the decision is obvious.

But homeowners should also be mindful of their future plans.

If they intend to relocate within 3 years, a new loan with a breakeven of 3 years or more will be redundant.

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