by OrangeTee & Tie Pte Ltd.

S'pore mortgage rates roughly double in 6 months; set to rise further, say property


Singapore, 06 May 2022

The global drive by central banks to battle inflation through increased interest rates is taking a toll on local homebuyers, as median mortgage rates have virtually doubled in the previous six months.

Mortgage rates are expected to rise further, according to property analysts, especially after the US Federal Reserve issued its largest rate hike since 2000 on Wednesday (May 4).

According to Redbrick Mortgage Advisory, a mortgage broker that compares interest rates from multiple banks, the median rate for a fixed two-year mortgage has jumped from 1.15 percent in December last year to 2.25 percent in May.

In December, the rate for a three-year fixed mortgage was 1.15 percent, but by May, it had more than doubled to 2.5 percent.

"Some banks have been adjusting the interest rate upward after the Fed announcement," said Mr Steven Tan, chief executive officer of real estate agency OrangeTee & Tie. "Interest rates would likely continue to move up due to inflation's persistence."

For instance, Mr Tan forecasts that the two-year fixed mortgage rates will rise from the current 2.25 per cent to 2.75 per cent at its highest.  One key reason is that some banks have been changing the terms of their packages. For instance, Mr Tan added that many foreign banks have recently stopped offering fixed rates. "It is always advisable to go back to their own banker to assess their current package status," he said

Ms Christine Sun, senior vice-president for research and analytics at property agency OrangeTee & Tie, said that although refinancing can come with a penalty fee, it may be worth it in the long term if the difference in interest rates is big enough. 

"They have to calculate whether it is worth paying the penalty, versus the increase in the monthly mortgages that they are paying," she said. 

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