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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

Initial Interest Rate

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Initial interest rate is an industry jargon used by mortgage professionals.

It refers to the interest rates on housing loan before it reverts to a “thereafter” rate.

For example, if a home loan is structured by:

Year 1, SIBOR + 0.75%

Thereafter, SIBOR + 1%

The initial interest rate is SIBOR + 0.75%.

If it has:

Year 1, Fixed 1.5%

Year 2, Fixed 1.5%

Thereafter, SIBOR + 1.25%

The initial interest rate is fixed 1.5%.

Initial interest rate are often much lower than what is charged thereafter so that home buyers find the loans attractive enough to consider.

For this reason, they are also sometimes known as teaser rates.

One of it’s selling points is that even if borrowers find the thereafter rates high, they can still take up the loan to take advantage of the low rates and refinance the mortgage when they enter the period of thereafter rates.

However be mindful not to be swayed by gimmicks and pay attention to the interest that you will actually pay.

The initial rate period is the period of time when the initial interest rate is active. This period is also commonly (but not always) accompanied by a lock-in period where the borrower would incur penalty charges for redemption.

It should also be noted that even though an initial interest rate can be extremely low, it is not used to calculate TDSR for stress test when evaluating the loan amount that a borrower can be approved for.

The interest rate for this purpose is set as 3.50% for residential property and 4.50% for non-residential property by MAS.

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What We Do For You

We Gather And Provide You Information On The Best Housing Loans In Singapore So That You Can Make A Better Decision Based On What Is Available In The Market

Which bank do you recommend for home loans in Singapore?

We don't recommend banks. We recommend you the best home loan that suits your profile and financial position.

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.

Want to see housing loan interest rate trends for the last 36 months?

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It makes absolutely no sense to pay more
than you have to on a home loan.

Find the best mortgage rates here
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It makes absolutely no sense to pay more than you have to on a home loan.

Find the best mortgage rates here
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