Important Logistics To Consider Under Rising Interest Rates In Singapore

You should always be proactive and aspirational in life. Not even frustrating economic circumstances should have you feeling down for long.

Of course, these notions are easier said than done. After all, most countries in the world are feeling the pinch of rising interest rates. There are many grim reasons for this, too, from economic mismanagement and the pandemic to the war in Ukraine.

Rising interest rates, volatile markets, and inflation are also causing numerous challenges for investors. Experts also claim that the coast is far from clear with this economic turbulence, so it’s important to be mindful of long-term consequences.

Checkout Four Important Logistics To Consider Under Rising Interest Rates In Singapore

Still, though times are tough, you shouldn’t retreat into despair and hopelessness.

Here are some important logistics to consider under rising interest rates in Singapore.

1. Choose More Suitable Loans

If you’re hoping to buy property in Singapore and require a loan, you must choose wisely. Loans aren’t objectively worse or better than others, but the context of your situation may lead you to have certain preferences that must be adhered to.

Some people prefer to choose fixed-rate loans for their mortgages. While it does mean you won’t have to pay more interest if rates continue to go up, it can be unfortunate to fix it in today’s climate for rates to go down later. Interest rates are already high, and keeping things that way may not always be sustainable long-term regarding your mortgage.

Floating-rates home loans can be more volatile, but there are opportunities too. It’s worth researching more about SORA and SIBOR rates too. By 2024, the former will phase out the latter, with some banks discontinuing SIBOR-pegged home loans already.

By visiting PropertyGuru Finance, you’ll notice that many of the cheapest packages are SORA packages, despite the interest rate hikes. It’s also said to be more stable than SIBOR ever was in terms of risk, with better predictability and reduced volatility.

Of course, it all comes down to preference. If you have a larger risk appetite floating loans and SORA may be for you. If you prefer having certainty in your mortgage payments, fixed-rate loans might appeal to you more.

Both approaches have pros and cons, but either plan could help you navigate the market. If you have any uncertainties, contact the mortgage experts at PropertyGuru for informed and unbiased guidance.

2. Invest Smartly

Property is only one of the worthwhile investments you can make during economic strife. Others will preserve the buying power of your money well, even during times of financial strife.

A stable investment portfolio can always help you effectively hedge against inflation. However, diversification is always key in these efforts, optimizing the potential of returns whilst mitigating the bite of risk. Varied investments make your portfolio less volatile.

Bonds are useful to invest in with their corporate or savings focus. Equity funds, commodities, REITs, stocks – there’s a lucrative list of exciting choices you can explore further. Not all options will be equal, given the turbulence of the global economy and the unpredictability one can experience with their circumstances. Still, some will be viable at any given time.

3. Perform A Balance Transfer

Almost everybody in Singapore uses credit cards. That said, how you use them matters greatly, especially when interest rates are more brutal than usual.

It’s generally recommended that you transfer your balance to a 0% interest account. Obviously, this doesn’t erase your debts, and there can be processing fees to pay. Nevertheless, long-term these arrangements should be far more cost-effective for you, as you’ll hopefully be able to avoid your credit card’s inflated interest rates. More comfort and stability can come from this strategy.

There are some potential limitations to be aware of that affect the amount you can be approved for. For example, your credit limit with the bank does apply, so you can only transfer as many funds as that allows.

It may not be possible to transfer all of your debt in one balance transfer if you have previously exceeded credit limits on your cards too. You may not be approved for the full amount if you have outstanding debts with multiple cards.

If the stars align for you in your circumstances, it’s worth exploring these options. Balance transfers can be a flexible way to make things more manageable and reduce pressure with rising interest rates.

4. Partner Activities

Many people have their financial fates at least partially sealed with a romantic partner. Consequently, recommending that they, too, look into some of these options may help your shared situation under rising interest rates in Singapore.

It might be unfair to pressure them into mirroring your approach as well. Remember, everyone has a different opinion on financial well-being, market trends, and how things might shape out in the future. Some people take big swings to combat rising interest rates; others prefer to play it safe and weather the storm, biding their time.

Nevertheless, there’s no harm in shared discussions and recommendations. So long as concerns are communicated respectfully, understandings should be arrived at, along with some progress made.

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