Refinancing 901

I should be expecting a letter from my bank soon, telling me that the interest rate chargeable on my housing loan will be revised to 1.9%, with effect from September 1. This is a second time win for me, having my housing loan interest rate shaved by another 0.1%.

Predictions for the Fed Funds Rate tell us that it looks set to remain at 2% at least until October. Beyond that, “Federal Reserve policy makers agreed this month that their next change in interest rates will be to raise them.”, but we’ll have to wait till the next FOMC meeting announcement to get further clues on when the raise might come. Another factor to consider is the strengthening of the US dollar. The US dollar is still trending up against the Singapore dollar and interest rate parity suggests that interest rates in Singapore will fall as a result, which indeed seems to be the case for now.

Will i still get favourable rates come December when my SOR pegged home loan rates are revised again? I certainly hope so. Short term loan rates such as the 3 months SOR or SIBOR rates should have a good chance of staying lower than the 2 or 3 years fixed rates or floating rates, even after accounting for the1% interest rate banks typically charge on top of SOR or SIBOR. However, if interest rates were to appreciate sharply then i would have lost out on the opportunity to lock-in the current rates. Hopefully i can enjoy reasonable rates for at least the next 2 years with the SOR pegged home loan.

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