Now is the best time to refinance to a fixed-rate home loan in Singapore

Couple looking at refinancing their home loan to fixed-rate home loan package in the current high-interest rate environment

Now is the best time to refinance to a fixed-rate home loan in Singapore

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Choosing between a fixed-rate home loan or a floating-rate package is one of the first decisions a homeowner must make when buying a home in Singapore. 

In this article, we take a look at fixed-rate home loans in Singapore and why you should keep a close eye on them this year. 

What is a fixed-rate home loan?

Fixed-rate home loans are home loan packages that provide borrowers with a fixed interest rate over a specific period – coined as the lock-in period. The lock-in period usually ranges from 2 to 5 years. 

During this fixed period, your monthly repayments remain the same regardless of market interest rate fluctuations.

After the fixed period, your fixed-rate home loan will be automatically pegged to either SIBOR, SORA, or Fixed Deposit Home Rate (FHR) based on your bank’s home loan package.

Learn more about SORA replacing SIBOR here

Why it makes sense to choose fixed-rate home loan in Singapore now

Getting a fixed-rate home loan during an interest rate hike – which is coming very, very soon – can give you the opportunity to minimise future costs.

In general, home loan fixed rates are more beneficial when interest rates are estimated to rise over the next 2 or 3 years as they protect you from higher mortgage payments.

As we anticipate rising interest rates, hopping onto a fixed rate home loan now will be favourable. Check out the different home loan packages that are suitable based on the different interest rate environments: 

Highest Potential SavingsModerate SavingsLowest Savings
Low interest-rate environmentSORA PackagesFixed Deposit Rate (FHR) PackageFixed-Rate Packages
High interest-rate environmentFixed Rate PackagesFixed Deposit Rate (FHR) PackageSORA or Board Rate Package

Getting a fixed rate home loan is the best solution for homebuyers who are looking to streamline their finances and avoid unexpected changes in interest rates.

Check out the latest home loan rates packages here

Couple looking at current home loan rates fluctuating based on the interest rates in the US market

Quick facts on fixed-rate home loans in Singapore

1. Fixed-rate home loans will turn into floating rate home loans after your lock-in period

Your fixed-interest home loan will likely revert to a floating-interest home loan after your lock-in period. If you want to continue enjoying fixed rates, the best way to go about it is through refinancing.

Read more about home loan refinance here

2. Banks will not tell you when your fixed-rate home loan is “expiring” 

It’s good to take note that banks will auto-convert your expiring fixed-rate home loan to a floating rate loan without notifying you. 

On the other hand, if you choose to get a home loan through a mortgage broker, our home financing experts will help you track the home loan rates and remind you when your loan is about to expire. We will also advise you on the available financing option based on your current financial situation.

Singapore housing where many take up a home loan to afford

Getting a fixed-rate home loan in 2022

With the rise in unemployment in 2022, the stability of your monthly repayments is a key point to consider. Making sure you have enough savings for a rainy day and protecting yourself from sudden hikes is essential. 

In the fast-moving world of today, the last thing you want to do is fall behind—and that’s especially true when it comes to your home loan in Singapore. When the market is shifting, how do you know if your loan is still doing what it’s supposed to? 

We’re experts on home loans, and we’re here to help you make sure you stay with the times so that your loan doesn’t fall behind. If you want to get ahead of the game and make sure that your loan is working for you — not against you — contact us now!

Our goal at FinanceGuru is to help homeowners find the right home loan to meet their financial needs. Get tips on how to save money and optimise your home loan today.

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