Cheaper home loans makes the news

News about home loan rates appear in the newspaper very sparingly, and this just happened last Saturday, showing up in the Straits Times with the headline “Cheaper home loans in store”. In a gist, the article says that “KEY interest rates that determine mortgage levels have fallen steeply, promising cheaper home loans but even leaner times for those with bank deposits. “¦ The falling rates have followed the trend of the rates set by the United States Federal Reserve, which continue to be at historic lows. They have also come as the Singdollar has been allowed to strengthen since April.”

Indeed, USD has fallen drastically against SGD recently, resulting in the Swap Offer Rate (SOR) falling to 0.29426 on Aug 11, 2010, the “lowest in at least 10 years”. This is good news to mortgagors, with savings to look forward to for perhaps an extended time.

To answer the question of whether SOR-pegged or SIBOR-pegged home loan is more attractive, they are actually more or less comparable. To quote actual examples, UOB offers SOR + 0.99 (which works out to 1.3%), while SCB offers SIBOR + 0.75 (which works out to 1.31%).

The article points to Bloomberg as the source of the Swap Offer Rate, which i have just come to realize provides updated rates shortly after the daily rate is determined at 11am, and even gives a chart with data from up to 5 years ago. This kind of makes my SOR daily chart redundant. I would recommend going directly to Bloomberg if you’re interested in getting the most authoritative rates, and to make use of the interactive charts they provide. I will continue to update my chart daily as far as possible, in fact now to use the rates published by Bloomberg (instead of the day-old rates previously). Hope you continue to find this site useful!

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