Your neighbours already refinanced to save more, have you?

Your neighbours already refinanced to save more, have you? – Ever wondered how your neighbours can afford those luxurious items that you always wanted or how they are constantly worry-free about money? Here’s a hint, they refinanced their loans! In a turn of events, The United States (US) Federal Reserve has decided to cut its interest rates by one half percentage point to 1-1.25% on the 3rd of March 2020, a move to shield the US economy from the impact of the recent COVID-19. But you may be asking, what does this have to do with Singapore and the mortgage rates offered here?


How Is It Related to Singapore?

It has everything to do with Singapore, because of the Singapore Interbank Offered Rate (SIBOR) – a benchmarked rate that is taken as reference for both lenders and borrowers in Singapore’s economy. The SIBOR is often pegged to the US interest rates and this affects nearly everything, from fixed deposit accounts to home loans etc.


How Does That Affect People Looking to Take Up Mortgage Loans?

It matters greatly in the perspective of people who are looking recently to take up a mortgage loan, because the mortgage rates are pegged to the SIBOR! When the US Federal Reserve cuts interest rate, the SIBOR follows as well which is evident in the graph below, showing the decrease in the rates, following the announcement of the cut. This means a lower mortgage rate, and a lower mortgage rate is a good sign for buying a new home because the SIBOR pegged floating mortgage rate has dipped below the fixed rate which should spur you to either refinance or take on that loan ASAP!

Your neighbours already refinanced to save more, have you?

Figure 1: Singapore Interbank Offered Rate (SIBOR) 2020

Photo: Adapted from sibor.sg/history


Should I Seize This Opportunity?

For prospective homeowners, this might possibly be a good time to consider purchasing a new home as lower interest rates means lower borrowing rates as well. However, do take into consideration that the process to purchase a home can be very complicated, arduous and expensive. It is worth noting that prospective homeowners should sit down and discuss with their spouse and family members before taking on such a huge decision to avoid incurring a financial burden in the future.

For existing homeowners, it is the best time to capitalise on this opportunity and refinance your loans. This allows you to acquire a lower interest rate that will reduce the amount you have to pay every month. In the short-term, it may seem to make little difference but over the length of your home loan, you will be surprised how much you are able to save and finally be able to go for that much awaited honeymoon trip or to buy the things you’ve always wanted to buy. 


Who Should I Look For?

At Avant Consulting, our consultants can offer you advice regarding your next best step to take before you take that loan. With our robust connections with various banks and financial institutions, you can enjoy rewarding benefits such as acquiring the interest rates that you and your spouse are looking for. Furthermore, with our expertise in new commercial & residential property mortgage loan and refinancing of commercial & residential property, we can provide you with advice that will help you save a significant amount, don’t wait for the rates to go up and refinance while the iron is still hot!



1)      https://www.reuters.com/article/us-usa-fed/fed-cuts-rates-to-blunt-coronavirus-impact-markets-drop-idUSKBN20Q22F

2)      https://sibor.sg/about

3)      https://www.asiaone.com/money/feds-coronavirus-fed-rate-cut-could-affect-your-mortgage-rates

4)      https://www.businesstimes.com.sg/banking-finance/feds-rate-cut-thrusts-singapore-banks-into-thicker-fog


Your neighbours already refinanced to save more, have you?