To say that interest rates has been rising at a frightening pace is stating the obvious. Recall that the United States Fed Funds Rate started the year at 0.25% and is projected to peak at 4% by year end. Such a steep and fast rise has certainly thrown a spanner to some homeowner’s mortgage repayment plans. While some mortgagors may be locked into their financial agreements, they can still evaluate whether changing the mode of their payments will lead to a better financial outcome. With a rising interest rate environment, is it better to use CPF or cash to pay your housing loan? I review the pros and cons of doing so in this article.

LOW INTEREST RATE ENVIRONMENT

For the past 15 years or so, one could shop around and obtain a competitive mortgage loan package which cost less than what CPF is paying under the Ordinary Account (‘OA’). Today, shopping around and comparing mortgage plans have become easier with...