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Home loan problem ! Is the fixed rate really fixed?

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Old 03-08-2020, 11:34 AM   #1
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Question Home loan problem ! Is the fixed rate really fixed?

Hi All

Home loan problem ! Is the fixed rate really fixed?

I had a bitter taste in the past while taking floating rate, Bank just kept on increasing every three months ( even though they showed my some statistics that the floating rate has not increased much in last 5 ~ 10 years ). So I dont trust the banks words.

How to decide? What are the T&Cs to look for?

Thanks to all in advance
ROby
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Old 03-08-2020, 11:39 AM   #2
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Hi All

Home loan problem ! Is the fixed rate really fixed?

I had a bitter taste in the past while taking floating rate, Bank just kept on increasing every three months ( even though they showed my some statistics that the floating rate has not increased much in last 5 ~ 10 years ). So I dont trust the banks words.

How to decide? What are the T&Cs to look for?

Thanks to all in advance
ROby
Yes, fixed rate is really fixed. MAS won't allow banks to play punk on this. Which is why in the loan fact sheet, there is this:

"* Your FI should not, under any circumstances, revise a fixed interest rate during the period for which the interest rate is stated as fixed."
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Old 03-08-2020, 11:51 AM   #3
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Hi All

Home loan problem ! Is the fixed rate really fixed?

I had a bitter taste in the past while taking floating rate, Bank just kept on increasing every three months ( even though they showed my some statistics that the floating rate has not increased much in last 5 ~ 10 years ). So I dont trust the banks words.

How to decide? What are the T&Cs to look for?

Thanks to all in advance
ROby
Go for sibor rate with local bank. It’s better than fixed rate imo. Sibor is Pretty Low right now and transparent, unlike foreign banks, can adjust the spread sometimes. Currently paying about near 1% interest rate. But I understand there might be a slight increase in spread due to Low sibor rate.

Cheers
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Old 03-08-2020, 02:05 PM   #4
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At first I want to take sibor too for my recent bank loan but in the end I went for DBS 5 year fixed 1.5 and after 12 months can free change if I want to. I guess there is no perfect bank loan for consumers, its about what you want and what sort of appetite you have. Banks are not stupid, when sibor go down drastically, they are going to adjust the spread. My absolute opinion only my opinion is that I will only take Sibor rates when the spread is low, way below 1%. Right now, the spread is like 0.9 or 1% around there, and if you are taking like maximum tenure, over that long period, how likely you think Sibor is going to stay very low always? But like I say, all the analysis, you will never arrive at the perfect answer which is better. Go with something you are comfortable to pay. For me, I am comfortable with my monthly payment even if I go jobless so I rather live with peace of mind for the next 5 years when I am expecting a volatile 2-3 years at least.
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Old 03-08-2020, 06:02 PM   #5
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I took up sibor package before the banks raised their spread as I was aware US is cutting rates due to covid.

Thankfully I decided fast as the bank spread for sibor package went up to 0.9-1% shortly after I submitted my application.

Based on latest bank letter, my next 3 mths interest will be at 0.84%.

Floating or fixed really depend on you risk appetite. If you monitor market and follow financial news, maybe floating isn't a bad idea since sibor is so low now but the bank spread now is high. Plus usually there will be a free 1x or 2x repricing. So if rates start to climb, maybe you can quickly switch to fixed rates.
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Old 03-08-2020, 06:18 PM   #6
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I took up sibor package before the banks raised their spread as I was aware US is cutting rates due to covid.

Thankfully I decided fast as the bank spread for sibor package went up to 0.9-1% shortly after I submitted my application.

Based on latest bank letter, my next 3 mths interest will be at 0.84%.

Floating or fixed really depend on you risk appetite. If you monitor market and follow financial news, maybe floating isn't a bad idea since sibor is so low now but the bank spread now is high. Plus usually there will be a free 1x or 2x repricing. So if rates start to climb, maybe you can quickly switch to fixed rates.
For those who had tasted the sweetness of Low sibor rate from 2008 to 2016, they will know sibor is still a better option if the spread is reasonable. Else go for fixed rate if spread is too high.
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