Recently someone shared with me how he positioned his home loan such that he’s only paying approx $300 a month in interest on his ~$650K condo loan. Intrigued? Let’s see how he did it.
The story first starts around a year ago in mid-2019 when interest rates were on an uptrend. If you check back, fixed home loans were very popular as most consumers wanted to hedge their risk against rising rates.
Unlike in US where one can pick up 30 year fixed rate mortgages, Singapore “fixed rate loans” are usually only fixed for the first 2-5 years at around 2.3-2.8% p.a. at the time and would reset to about Sibor+0.70% thereafter.
Rates had already been rising quite steadily with the global economy and more specifically the US economy showing positive signs. Everyone was expecting rates to go up.
Then this happened :
Our pathetic, slow moving Federal Reserve, headed by Jay Powell, who raised rates too fast and lowered too late
