More keen on floating rates for home loans amid decline: Brokers

Sora rates which guide such loans falling since hitting 3.6% to 3.7% range in late 2023

- Chor Khieng Yuit

More home owners are considering floating-rate mortgages as the benchmark rate for such loans in Singapore continues to fall, say mortgage brokers.

The uptick is not across the board, however, as many people are still keen on fixed-rate loans for greater financial certainty, they told The Straits Times.

Mr Clive Chng of Redbrick Mortgage Advisory said that in the past, nearly all his clients chose fixed-rate loans.

Now, he estimates that one out of every 10 clients is open to considering floating-rate packages.

Similarly, chief executive of Mortgage Master David Baey said about 40 per cent of his clients now go for floating-rate packages, up from 5 per cent in April.

Redbrick and Mortgage Master are among the larger mortgage advisory firms in Singapore.

Over the past three years, when interest rates were high, it was a clear-cut decision to take a fixed-rate home loan to lock in the loan rates a home owner has to pay.

Now, as interest rates creep lower, the conversation over whether to take variable rates or fixed rates has resurfaced.

The Singapore Overnight Rate Average (Sora), which is used for floating-rate home loans, has been falling since rates hit the 3.6 per cent to 3.7 per cent range in late 2023.

The rates slipped further to the 3.4 per cent to 3.5 per cent range on Sept 18, 2024, after the US Federal Reserve started on its rate cut cycle.

Since then, they fell at least 1.2 percentage points to between 2.2 per cent and 2.3 per cent as at June 2—a bigger decline than for US interest rates which have come down by 1 percentage point in the same period.