Changing interest rates among issues borrowers need to take note of

the wake of the debacle.

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Mr Loh, the private property owner, is relieved he did not take up the home equity loan to invest in an investment-grade corporate bond, which was originally one of the options he was contemplating.

Interest rates shot up as the US Federal Reserve began its tightening policy in March 2022. Mr Loh would have likely faced a double whammy of a rise in the interest rate of his home equity loan to a rate higher than the corporate bonds, even as bond prices fell.

Mr Chia said home owners should also not take a home equity loan to buy property overseas. This practice is risky because there are exchange rate risks associated with investing in foreign assets.