The majority of Singapore mortgage loans that are accepted and disbursed are made up of Singapore mortgage rates that are benchmarked to the Singapore Interbank Offer Rate (SIBOR) and the Swap Offer Rate (SOR). With SIBOR and SOR rates plunging to record lows, 2011 is definitely a year that will be referenced to over and over again the coming years.
So while financing property purchases, refinancing existing properties and Singapore home equity loans are becoming more affordable due to low Singapore mortgage rates, it is also attracting foreign investors to buy properties in Singapore. This is both due to low mortgage interest rates and the strong Singapore dollar. This can effectively drive up prices of the already highly priced real estate market.
Even though you may now think that you can finally afford that dream pent house because of the low Singapore mortgage interest rates, you have to be mindful of the dangers to your personal finances when mortgage rates go up. In other words, if you can just about afford your mortgage loan now at low interest rates, you could be in for a shock when mortgage rates start to rise. SIBOR rates at record low and SOR rates in the negative region are unprecedented events. You have to be aware that SIBOR hit over 9 % in the 1990s.
Because current benchmark rates are so low, your mortgage loan Singapore can become critically unaffordable if it hits 4%-5%. So always bear in mind that floating rates move with market conditions and always leave an income cushion that you can protect yourself against should benchmark rates make a sudden surge and fly through the roof. Failing to service your installments and defaulting on your mortgage loan can mean foreclosure.
Always use a proper mortgage loan calculator to calculate your monthly payments and determine how much you can afford. You can contact us to obtain a calculator that allows you to make future Singapore mortgage rate forecast and analyse the changing monthly installments that you have to cough up when benchmark rates fluctuate. Do not jump into buying a highly priced property just because the existing Singapore mortgage rates are very affordable. Failing to properly judge whether you can afford your dream home can be disastrous to your own financial well-being.