So ever since we initially gotten a home loan in November 2017, interest rates have gradually been creeping up on us. In a blink of an eye, Maybank had raised its Fixed Deposit Mortgage Rate (FDMR) from 1.20% to 2.05%, which is about a 70% increase.
| MAYBANK | FDMR36 +0.08% | FDMR36 +0.18% | FDMR36 +0.28% | |
| Revision from | FDMR36 | 1st Year | 2nd Year | 3rd Year |
| 17 APR-19 | 2.05% | 2.13% | 2.23% | 2.33% |
| 26 JUL-18 | 1.80% | 1.88% | 1.98% | 2.08% |
| 20 MAR-18 | 1.40% | 1.48% | 1.58% | 1.68% |
| NOV-17 | 1.20% | 1.28% | 1.38% | 1.48% |
This also means that what I could have enjoyed a low interest rate of 1.38% is now 2.23% in my second year. There was a need to tackle this now. So I did a comparison in the market on what is available and settled on a 3-years Fixed with UOB.
| UOB | 1st Year | 2nd Year | 3rd Year |
| Sep-19 | 1.98% Fixed | 1.98% Fixed | 2.08% Fixed |
The climate seems uncertain on the direction of SIBOR/SOR movement in the near future, thus far I am not taking any chances by locking into 1.98% for now. This translates to about $200+ of savings in monthly installment from what we are paying currently.
Moreover, should interest rates lower in the next year or so, the contract allows us one free conversion of interest rate. For folks who miss out on home refinancing, it is good to periodically monitor the end of your lock-in period and shop around for cheaper interest rates in the market.
Theory of Constraints 
How are you paying your home loan? Cash only? So you transfer everything you earn in OA to SA? Thanks! 😉
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We do a mix of Cash and CPF. So depending on the climate, it was more cash early on, thus the greater move from OA to SA. But the current COVID-19 situation has created opportunities in the equities market for example, thus it makes more sense to use CPF OA to pay our home loan now and having more cash on hand for investment.
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