Some homeowners who opted for a bank loan to finance their mortgage have been left in shock after the three major local banks announced yesterday (Oct 4) that the fixed interest rate for housing loans will be raised to a maximum of 3.85 per cent.
UOB has claimed that more customers were now asking for repricing and refinancing than those who were a year ago, in line with market trends in a rising interest rate environment. DBS and OCBC pointed out that more customers have recently sought stable mortgage rates.
One 34-year-old, who just moved into his new home in April, told Channel 8 News that he opted for a bank’s two-year home loan variable rate package last September when the rate was 1.1 per cent and the fixed rate was 1.3 per cent.
Perhaps regretting the fact that he didn’t opt for Housing Development Board’s (HDB) housing loan, he said:
“Looking back now, I will regret it a little. In fact, we just received information from the bank yesterday, that is, from 1.1% when we first started, it has now risen to 3.3%, which is not what we expected.”
The new homeowner has decided to rent out an extra room to cope with the increased loan repayment cost, for now. He added that he will consider further actions at a later date, given economic conditions and inflation.
MoneyOwl Financial Planning’s Justin Tan advised, “It’s best to limit your monthly debt repayments to 35 per cent or less of your income, so you should be able to handle it no matter how high the interest rate is.”
He added, “If you’re cash-flow tight right now, or your income isn’t stable, then I’d recommend looking at fixed rates.”
HDB homeowners who did not opt for HDB mortgages in the first place, would not be able to do so later. Experts have advised that homeowners who want to feel at ease should seriously consider whether bank interest rates will really serve them well, since they may be lower in the short term but heftier as time goes on.
The post Some homeowners in shock after DBS, OCBC and UOB hike home loan fixed interest rate appeared first on The Independent News.
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