- Pegged to Singapore Interbank Offer Rate (SIBOR), Board Rate or Fixed Deposit Home Rate (FHR)
- Comparably more volatile as it is subject to revisions and market fluctuation. You can enjoy added savings if interest rates were to dip, but also risk paying more when interest rates rises
- Banks will typically give a 30-day advanced notice when the rate changes, giving you time to find a refinancing option
- Floating rate borrowers would also enjoy the flexibility to prepay the loan early as fixed rate counterparts may not have that option
- Interest rates remain unchanged throughout the lock-in period (which averages from 1 to 5 years)
- Allows for a consistent budgeting planning with fixed monthly repayments
- Rates are not affected by market fluctuation (suitable for those with low-risk appetites and value stability, as we live in a time of unprecedented economic uncertainty)
All in all, what type of housing loan should you go for?
Floating Rates: If volatile market conditions don’t deter you, or if you have an eye for spotting the perfect moment to strike when interest rates are showing signs of plummeting, then the floating rate package is best for you.
Fixed Rates: People who require interest rate protection may also find this type of loan enticing so as not to lose out in monthly mortgage repayments. Do note that there are hefty fees if you were to opt out or refinance within the lock-in period.