Two Singapore banks have been offering home loan rates for as low as 0.2 percent on selected properties.
The three-month Singapore dollar Sibor has hit a record low of 0.438 percent since January, while the three-month SOR has moved between 0.189 percent and 0.3 percent since April. It now stands at 0.21 percent.
The new record low interest rates are usually imposed for a promotional period like the first year, after a higher rate is applied.
Compare a SOR plus zero package that increases to SOR +1 percent after three years and a flat SOR +0.7 percent package to a S$1 million 30-year loan.
Vinod Nair, Chief Executive of website Smartloans.sg, said a borrower paid a total interest of S$5,430 for the first three years under the first package compared with S$25,557 for the same package. However, the borrower would actually pay less using the second package for a 30-year loan tenure.
Dr Chua Hak Bin, economist at Bank of America-Merrill Lynch, said the latest trend could be due to the lower mortgage applications and the “intensified competition among banks to maintain mortgage loan volumes.”