Buying a home with a pricey home loan can still make sense
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INTEREST rates are rising – the three-month compounded Singapore Overnight Rate Average (Sora) has soared from under 0.2 per cent per annum at the start of the year to nearly 2.2 per cent as at value date Oct 7, 2022. A floating rate home loan that is pegged at 1 per cent plus three-month Sora will now cost around 3.2 per cent per annum.
Thus far, Housing Development Board (HDB) resale and private homes prices in Singapore have been resilient. Based on flash estimates by the Board and the Urban Redevelopment Authority, HDB resale and private home prices in the third quarter of 2022 are up 11.4 per cent and 13.2 per cent respectively from a year ago.
Rising home loan rates may not deter cash rich buyers, save there is opportunity cost when deploying funds to buy homes.
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