Understanding SIBOR, Board Rate, And Fixed Deposit Home Loans
By Stacked Homes • June 4, 2020
If you feel like you’ve listened to the mortgage banker for 20 minutes and understood nothing, you’ve done well. Most people find that the more they hear, the less they actually understand. Because with SIBOR, Board Rates, and Fixed Deposit loans all working differently, it’s not surprising that confusion abounds.
Here’s a simple, straightforward take on what this all means:
SIBOR loans
Board Rate loans
Fixed Deposit-pegged loans
Interest rate decided by:
The median interest rate between local banks
The bank
The interest rate of some of the bank’s fixed deposit products
Volatility:
Rate typically changes every one month or three months
Depends on how your bank wants to behave
Relatively low, as banks don’t change their fixed deposit rates too often
Biggest risk:
SIBOR rates are affected by many variables, such as the US economy
The bank can do anything it wants to the interest rate
This is ultimately still a type of board rate, the bank can still do what it likes (see below)