Home Loan Refinancing in 2024: Interest Rate Overview

Lowest Mortgage Rates for Refinancing (2023)

Amid the low interest rates that prevailed last year, banks in Singapore tried to outdo one another by offering the most attractive home loan deals. Since mortgage rates went up in 2023, it’s as good a time as ever to refinance your home loan. Here’s our ranking of the best fixed and floating rate mortgages around:

Fixed Rates (Private Properties)

In the current low interest rate environment, a floating rate (such as those benchmarked against SORA) may be the package of choice for private property owners with a higher risk appetite.

Most bank spreads that are based on SORA rates have a relatively short lock-in period, which lowers the cost barrier of switching to a different interest rate package (also known as repricing or conversion). This is helpful when facing the prospect of soon-rising interest rates.

HSBC’s 1M SORA packages (not in the table above) currently offer this feature completely free of charge. This gives it a major advantage over the other options, which all have at least a 1-year lock-in period. In general, HSBC also offers the highest cash rewards on all loan tiers, which could fully offset all refinancing fees.

Disadvantages of Home Loan Refinancing

Despite the possible savings it could bring, home loan refinancing isn’t a bed of roses.
Straight off the bat, there are conveyancing (legal) fees (usually ranging from $1,800 to $3000) and valuation fees (about $160 to $1,000). There’s also a chance you could also incur penalties on your current loan.

Refinancing an HDB Loan in Singapore

If you’re an HDB homeowner and aren’t planning on moving to a new place soon, you could consider refinancing your HDB loan. This could help you save quite a bit, as we’ve worked out below:

For example, you take a loan of $350,000 with a loan tenure of 25 years. With an HDB loan at 2.6% per annum, you would repay about $1,604 per month, of which about $758 might go towards interest. By the end of the loan tenure, you would have paid about $126,353 in interest alone.

Keeping the same loan amount and tenure period, a bank loan at 1.3% per annum would result in a monthly repayment of about $1,3677, of which about $379 goes towards interest. By the end of the tenure, you would only have paid about $60,138 for interest. That’s a lot of savings!

You’d then have to subtract your conveyancing fees, but the overall savings are still significant. Of course, the figures might not be the same in your case, so do weigh the costs and benefits of refinancing in your own case carefully before deciding if refinancing is worth it.

Lowest HDB Loan Refinancing Rates in Singapore

Here are our recommendations of the best places to get your HDB loan refinanced:

Fixed Rates (HDB Properties)

When to Refinance an HDB Loan

As a general rule, you should consider refinancing your HDB loan when interest rates are currently lower. This frees up more of your money for other priorities.

Typically, refinancing is done every 2-3 years (based on your lock-in period). However, if you’ve measured the costs, you don’t have to wait for the lock-in period before refinancing. We would suggest you start the refinancing process about 3-4 months before your lock-in period ends.

Other good times to consider refinancing are: if you plan to stay in the same flat for a few more years to come; or if your financial situation has changed and you may need some additional disposable income to clear the loan faster or pay for other important things.