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Anonymous
I'm buying a condo requiring 450k mortgage loan. DBS offered 1.5% with 5-yr lock in while others offer 1.2% to 1.3% & 2-3 yr lock in. Which is better based on future int rate predictions? Thanks!
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Peter Lin
13 Apr 2021
Brand Comms Lead at Mortgage Master
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No one can truly predict the future, but it's quite clear that with interest rates brought so low largely due to the pandemic, we can probably expect it to rise sooner than later now that vaccinations are available.
If you are able to afford it, it may be more prudent to lock in the 1.5% interest rate over 5 years. Since in the long-term, a homeowner can expect to pay on average between 1.6% and 1.8%, securing a 1.5% rate over 5 years is a sound decision.
If you go with the cheaper rate, you may benefit for the first couple of years, but should interest rates rise in the next year, you may soon find yourself with a floating rate package (since all fixed rate packages revert to floating rate packages eventually) in a relatively higher interest rate environment.
Ultimately, the decision is up to you. Since your loan amount is $450k and you are buying a private property, you may not be able to refinance to a lower interest rate that easily after the lock-in period is over.