Housing loan on floating interest rate

Dear Mr. Tan,

I need your advice. My current housing loan interest rate is about 4.5%. Should I re-price it now on floating rate basis SIBOR + 1.25%, or wait a few months later?

I read that SIBOR will be much lower in middle of the year. If I sign on now, the SIBOR rate will be locked it at the current rate (i.e below 2%) for next one year.

REPLY:

Currently, you are paying 4.5%. The locked in rate for the next 1 year will be less than 3.25%. So, you are benefiting from the difference in interest rate. After one year, you will be on fully floating interest rate.

I think that you should switch now, rather than wait for a drop in SIBOR rate. I am not able to predict the short term trend in interest rate, so I am not able to help you on your timing decision.