Maybank Singapore published on their website that Singapore Residential Financing Rate (SRFR) will increased on 8 May 2018. We explore the impact.
Impact of SRFR
SRFR is commonly known as a board rate, which is used as part of their home loan interest rates. Using their home loan package launched in 2016 as an example, the interest rate offered was SRFR-2.45%. SRFR was at 4%. The effective rate would be 1.55%. It would vary whenever SRFR moved.
It will be increased on 8 May 2018 from 4% to 4.5%. The above example would result in 2.05%. As long as your home loan rate is pegged to SRFR, the effective rate will increase by 0.5% and monthly repayments will go up too.
For a $300,000 loan over 25 years, a 0.5% rate hike may translate to additional $70 per month. The interest payable is about 18% of the new monthly repayment. Similarly for a $800,000 mortgage, you may fork out $188 more a month.
Maybank mentioned in their FAQ that affected customers will be notified on the increased monthly repayments on 15 May for HDB property loan and 1 June for Private property loan.
Affected customers should compare and calculate their refinancing options.