Housing Loan Singapore

SIBOR or SOR?

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.

Definition

Refresh Interval

The refresh interval is the time period between the adjustment to home loan interest rates.

As there are no 30-year fixed rate mortgages in Singapore, housing loans usually consist of an index rate plus a spread. Which sums up to become the fully indexed rate.

And because indices are volatile and changes almost every day, the index rate changes every time a new interest rate is calculated.

The refresh interval, or refresh rate, indicates the time period between each time the mortgage rate “refreshes” to the new rate charged to a home loan.

A refresh adjustment interval can be as short as daily to as long as one year.

SIBOR for example, is one of the most common index rate used in home loans. It has variations like:

  • 1 month SIBOR
  • 3 month SIBOR
  • 12 month SIBOR
  • etc

Depending on the type of SIBOR a borrower has taken up and the terms of the loan contract, the refresh interval varies.

For example, someone on a 1 year SIBOR might have his housing loan interest rate adjusted to it’s most current level on an annual basis.

Saying that, it’s not impossible for a borrower to be on 1-month SIBOR but have the refresh interval set at 12-monhtly.

It all depends on the terms of the facility letter which a borrower should possess a copy of.

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SIBOR 14 Jun 2018

1 Month 1.40009
3 Month 1.52038
6 Month 1.66171
12 Month 1.85096

SOR 14 Jun 2018

1 Month 1.39053
3 Month 1.56581
6 Month 1.67225

How Does SOR Rates Hit Negative Value?

SOR rates are calculated with a complex financial formula, solved with simple algebra. The results of solving the equation therefore depends on the inputs used. Varying inputs that result from economic impacts and indicators can lead to negative value when the formula is solved. Key input indicators include USD/SGD spot rates and USD/SGD forward rates.

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.

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.