2020 was a tumultuous year for us at Golden Law, with COVID-19 throwing a wrench in the well-oiled works of our firm. The early days of the pandemic aka. The circuit breaker period was particularly trying for us with a softened demand for properties resulting in a diminished number of cases.

We kept ourselves afloat by focusing on a specific and integral part of our business — refinancing.

So what is refinancing? Essentially, it involves taking on a new loan and using it to pay off an existing one, thus swapping the creditor whom you owe your debt to. This could be beneficial to you for a variety of different reasons.

Ideally and most commonly, you manage to secure a new loan which has a lower interest rate than your old one. This can occur as a result of changes in economic conditions or your personal financial situation which grants you eligibility for this new loan when it might not have been available to you before.

Accordingly, refinancing to this loan with a lower rate allows you to effectively reduce your monthly payments which amounts to a significant difference over the life of the loan, especially for large ones like a mortgage.

Other applications of refinancing include altering the term of your loan to a more favourable arrangement, be it an extension or reduction in length, as well as consolidating multiple smaller loans for easier tracking and payments.

The pandemic, as damaging as it was and continues to be for most sectors, created a rather opportune window for refinancing when countries all around the globe began to lower interest rates to stimulate economic growth.

As the Monetary Authority of Singapore’s (MAS) monetary policy framework is centred around the exchange rate as opposed to interest rate, our banks usually take their cue to adjust interest rates from the US Federal Reserve (Fed) rather than any local government body.

Thus, upon the Fed cutting its target federal funds rate to 0-0.25%, the Singapore Interbank Offer Rate (SIBOR) followed suit and took a plunge as well. As of 18 February 2021, the 3-month SIBOR had dipped to 0.4%, a stark contrast from the 1.71% exactly one year prior, just before the full impact of the pandemic hit.

For those eyeing SIBOR-pegged mortgage rates, this was a godsend.

Inversely to the banks’ interest rates dropping for floating mortgage loans, the public’s interest in refinancing their home loans skyrocketed, with many existing loan customers eager to take advantage of the lowered rates to save themselves a chunk of change.

The surge of refinancing cases here at Golden Law gave us a crutch to stave off the worst of the downturn and helped us to maintain a healthy amount of business through the economic slump and its subsequent recovery.

Our lowest point, ironically at the height of the pandemic, was in April 2020 when we scraped by with 37 cases. Since then, we’ve steadily grown our numbers back up to a respectable 95 cases in December.

Refinancing can be complicated without the proper legal assistance and the cost of the associated fees must be considered alongside the aforementioned benefits. Should you be keen on refinancing your property, do get in contact with us here at Golden Law for a consultation and we’d be more than happy to assist you accordingly