A friend asked me if he should refinance his HDB housing loan with POSB. He currently has the HDB Concessionary Loan which attracts an interest payment of 2.6% per annum.
Pegged at 0.1% above the CPF-OA interest rate, the HDB Concessionary Loan's interest rate is unlikely to increase, ever.
Having a floating interest rate of 3 months SIBOR + 1.38%, the new POSB HDB loan gives the assurance that interest rate will not go higher than the CPF-OA interest rate for the first 10 years of the loan. CPF-OA interest rate is currently 2.5%.
What happens after the first 10 years? Well, interest rate will be revised to 3 months SIBOR + 1.48% and there will not be any upper limit to the interest rate anymore.
Intuitively, I feel that this is a good deal for anyone who wants to enjoy a lower interest rate on his ......