OCBC and UOB hike FDR and OHR

FDR Still Going Up?

As the thought leader in all things mortgage in Singapore, we track closely any movement in interest rates amongst lenders. The latest bank to announce a slight revision up to its FDR (fixed deposit rate) home loan peg is StanChart – by a mere 15 basis points increase this time.

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Here’s a closer look at the increases on FDR tranches from SCB home loans:

BankMortgage PegOld RateNew RateIncrease ByEffective Date
SCB9FDR0.901.070.1710 Jun
36FDR1.221.370.1510 Jun
48FDR1.351.500.1510 Jun

 

Does that signal cost pressures (or the need to acquire more deposits) and foretell similar moves by other banks with FDR mortgage pegs soon?  To be honest, we do not have the answer.   We have explained in this blog previously that the cost structures of banks are different and lenders also have different motivations from time to time – there are periods whereby one bank become less aggressive in acquiring new loans and another bank picks up the slack in competition. Hence when it comes to funding costs and motivations, it is a “black box” to us.  Notwithstanding the general dovishness in interest rate outlook for 2nd half of the year, we noticed some banks have in recent months revamped their high-interest account mechanics for example DBS’s Multiplier Account. It does seem that some banks are out to acquire more deposits.

All eyes are now on US Federal Reserve’s FOMC decision in two weeks’ time – should there be at least a quarter percentage rate cut which is now widely expected by the market (or latest by September), SIBOR the benchmark interest rate in Singapore would likely face some downward pressure.  And should FDR home loan pegs still remain stubbornly high or move up further due to cost pressures, perhaps it is time to make the switch from a bank-set mortgage loan peg to market-determined loan peg like SIBOR.

To do that homeowners could simply reprice within their existing bank to a SIBOR package if one is available, to take advantage of the unprecedented low spreads on SIBOR loans unseen in almost a decade thanks to free market compeititon.  Alternatively, they could also speak to us to find out who has the most competitive spreads for SIBOR home loans in the market currently.

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Do not get us wrong.  We are not discrediting FDR home loan peg which we have been advocating in this blog over the last few years when interest rate cycle had been going up.  However, we have maintained our view, since the onset of such FDR home loans in the Singapore mortgage scene from 2014-2015, that when the cycle reverses at some point – SIBOR home loan peg would be preferred as it will come down first!  SIBOR is driven by interbank market demand and supply and is not subject to the unilateral decision of any one bank to increase or decrese its BOARD or FDR mortgage peg.  And looking at the three possible interest rate trajectories (see below) as presented in a recent article, we think the likelihood of a flat or downward trajectory (2 & 3) looks very real.  Still we cannot be 100% sure about this.

us fed funds rate

 

We believe FDR home loan peg will also have to come down at some point in a prolonged interest rate decline.  However, as it is still so new as a mortgage peg in Singapore where we do not have for example a  twenty-year historical data to track the correlation between FDR pegs and SIBOR, it is hard to conclude in a recessionary environment how long a lag it would take before banks will adjust deposit rates down.  The fact remains that since inception of FDR home loan pegs – deposit rates which are linked to mortgages are no longer pure “cost of funds” for the banks but take on the nature of a lending index or peg akin to another type of BOARD rate.  It is a lever for the bank to increase or lower its interest margin on mortgages over time where it now exercises greater control.  We will need to go through a full economic cycle of boom and bust of minimum 10-15 years before we can truly scrutinize this relationship and draw any meaningful conclusions on the appeal of FDR as a mortgage peg over the long-term.

We do have historical tracking charts of FDR home loan pegs for the various banks over a 3 to 5 year period depending on when particular FDR tranches were launched.  Speak to our team of consultants to request for a copy for your own bank. And you might just want to take this opportunity to explore who has the most competitive home loan packages out there.  Apply for your home loan through us and receive a $150 Refinancing Valuation Fee Offset, or a special rate of $1,800 Purchase Legal Fee (includes stamp duty & gst), both subject to min loan of $500,000.  Terms and conditions apply.  Speak to our consultants today.

 

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals.  That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.

 

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shock that banks can raise spreads on home loans

They Say SIBOR Is Volatile

Bankers often like to say that when marketing mortgages pegged to BOARD rate or FDR (fixed deposit rate), but without regard for which part of the interest rate cycle we are in.

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This reminds me of the same situation about five years ago when interest rate began its slow accent in Singapore following oil price crash towards end of 2014 – bankers then touted BOARD rates as the most stable mortgage peg as it had not moved in the last 5 years.  Of course!  Because there was no reason for rates to move back then with US Fed pump priming an economy into life via three rounds of QE (quantitiative easing) if you recall.

My point is simply this – the context is important.  Just like how property investors who bought during the market peak in 1996 barely broke even when they sold off 10 years down the road; or how those who bought in the property market doldrums of early 2009 enjoyed spectacular profit margins. The same goes for interest rate cycles – those who had locked down fixed rates when rates were on its way up during 2016-2017 had made some wise moves; doing the same when we are near an inflection point now or near the peak of the cycle runs the risk of being stuck with a high rate should interest rate tumbles down.

Incidentally we forecast this back in March 2016 that interest rate should take 5-6 years to peak in this current cycle which means we are somewhere near the end by 2020/2021.  In recent weeks, more dovish statements by US Fed chair (who started dropping the phrase “Fed will be patient”) has got financial markets now pricing in at least one rate cut by US Fed before the year is over, maybe two.  So the cycle could even turn much earlier.  All eyes will be on the next major Fed FOMC meeting in two weeks’ time which we will be covering, so watch this space.

Back to question on the volatility of SIBOR. That is certainly true as it exhibits a much wider swing from peak to trough (see graph below).  However, that is both a boon and a bane depending on which part of the interest rate cycle one is in. When interest rates are going up, having one’s mortgage tied to SIBOR means interest rate and hence the monthly repayment will be revised upwards every month or every 3-month (for 1-month and 3-month SIBOR respectively) whenever SIBOR increases.  On the other hand, when interest cycle reverses and rates start dropping, the converse is also true – one sees the monthly repayment being adjusted down immediately the next month (for 1-month SIBOR)!

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As SIBOR is determined by money market forces and not dependent on the unilateral decision of any one single bank, we are of the view that should interest rate cycle reverses downwards, SIBOR’s volatility would make it the first amongst all mortgage pegs to fall.  We cannot say the same for BOARD or even FDR (which really has become a lending rate) where it may take up to 6 months or even a year for banks to adjust down as doing that too soon would mean a cut in the banks’ interest margin for the current financial year.

HSBC has just adjusted up their TDMR24 in May last month from 0.65% (unchanged since its launch in Dec 2017) to 1.40%!  It is the latest and last bank to hike FDR rates. Whether lenders will continue to hike on FDR pegs from here depends on the movements of SIBOR.  For the time being with no expectation of further rate hikes from US Fed this year, we are seeing mortgage rates stabilizing more or less at the current levels be it SIBOR or FDR.

So in conclusion, SIBOR is indeed volatile as what bankers claimed, but not necessarily in a negative way.  It can also work for the benefit of homeowners when interest rate cycle reverses. FDR mortgage pegs have worked well over the past few years until banks start to move up aggressively on FDR (as well as BOARD) pegs towards the end of 2018.  The crux is deciding at which part of the interest rate cycle are we at right now, and for that the best way is to take a look at the historical trending chart of US Fed funds rate vs SIBOR which we have shown in our article last month, and ask ourselves which trajectory is the most likely?

us fed funds rate

Refinance with our team of mortgage experts here at MortgageWise and you will receive $150 Refinancing Valuation Fee Offset from us, subject to min loan of $500,000. New purchase home loans will also enjoy a Special Purchase Legal Fee of $1,800 (all-in cost including mortgage stamp duty, gst) from our partner law firms.  Other terms and conditions apply.  So, speak to us today.

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals.  That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.

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Maybank mortgage rates

Maybank Brings Back FDMR

The latest bank to announce an increase to FDR (fixed deposit rate) home loan peg is Maybank – raising its FDMR36 from 1.80% to 2.05% and to take effect on 17 April.

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BankMortgage PegOld RateNew RateIncrease ByEffective Date
MAYBANKFDMR361.802.050.2517 Apr

The last hike by Maybank was almost one year ago back in Jun 2018.  With 3-month SIBOR increasing from 1.52% since then to the current 1.94% (as at 27 Mar), and coming after two further hikes from US Fed in Sep and Dec 2018, the calibrated 0.25% seems all the more palatable.  In fact, we believe most who signed onto Maybank’s floating rate package two years ago will find their new revised rates to hover at 2.2-2.3%, more or less on par with prevailing FDR floating rates and probably a tad below those whose mortgages are with local banks after the recent round of increases as reported in this blog.

In an interesting move, Maybank Singapore has also re-introduced FDMR36 as a mortgage loan peg – its only tranche of FDR home loans pegged to its published fixed deposit rate of 36-month tenure.  With immediate effect this applies to all its home loan packages previously pegged to its internal BOARD rate. Notwithstanding all the recent increases to FDR home loan pegs, we still see this as a positive development as we are a strong advocate of transparency.  FDR mortgage loan peg, even though it is set by the bank who can decide to increase it anytime, is still a much more transparent loan peg than BOARD which is impossible to be tracked by third parties.

The bank can increase FDR to expand its interest income, but excessive adjustments without fully justifying such increases can have backlash leading to massive exodus of existing customer base to other banks, which can only nullify the original objective of such a move.  As fixed deposit rates are published on the bank’s website, any frivolous hikes will be picked up by industry players and even the press and widely reported.  For an overview of all the increases to FDR pegs across all banks in 2018, read our very detailed tracking here.

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Lately we have also observed UOB removing all its BOARD packages since the start of this month.  Will the bank also bring back its FDR home loan pegs which it called FDPR (fixed deposit property rate)?  It will be interesting to watch this.

We are not privy to the funding and cost structures of various lenders in Singapore.  But what we do know is this – foreign banks depend more on fixed deposits than local banks as a longer-term source of funding for their operations. Local banks would have much greater access to retail deposits in the form of CASA (current account and savings account) accounts than foreign banks, especially DBS with its POSB franchise. To this end, it means any increases in FDR home loan pegs would hit the foreign banks’ cost of funds more than that of the local banks.

With this latest development, there are now four banks in the market offering FDR home loans – DBS (FHR8), StanChart (36FDR), HSBC (TDMR24) and Maybank (FDMR36).  How the various lenders manage the movement of FDR mortgage pegs in relation to SIBOR, both in its ascent and descent across interest rate cycles, will be key in deciding if it’s worth keeping the faith with FDR.

Work with one of the leading mortgage consultancy firm in Singapore in operations since 2014.  Not only do we track closely FDR peg movements and all news on interest rate, we make sure we deliver real value to clients who choose to take their home loan through us be it refinancing (receive a $150 Refinancing Valuation Fee Offset) or a new purchase home loan (enjoy a special rate of $1,800 Purchase Legal Fee which includes stamp duty & gst), subject to min loan of $500,000.  Other terms and conditions apply. Speak to our consultants today.

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals.  That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.

Compare All Latest Rates 2019

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StanChart Ups FDR Mortgage Rates

Now that local banks are mostly done with rate increases in the past months, foreign banks are expected to follow suit starting with SCB (Standard Chartered Bank) raising its FDR mortgage rates by 0.25% today.

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Here’s a closer look at the increases on FDR tranches from SCB home loans:

 

BankMortgage PegOld RateNew RateIncrease ByEffective Date
SCB9FDR0.650.900.258 Mar
36FDR0.971.220.258 Mar
48FDR1.101.350.258 Mar

In retrospect, the increases seem fairly reasonable given how the local banks have moved by a larger margin and this is normally what one would expect of a typical rate hike just like in the case of US Fed’s hikes of a quarter percentage point.

It is unlikely to be the last rate hike for the year as we do expect the last few remaining foreign banks who offered FDR home loans (at one point in the past) to move up on their deposit rates.  Some of these foreign banks, just like UOB and OCBC, have now stopped offering the pegging of home loan rates to fixed deposit rates and instead switched back to pegging to internal BOARD rates.

At MortgageWise, besides SIBOR rates which we monitor weekly, we can only track any increases to FDR (fixed deposit rate home loans as a category) rates which are published officially on the various banks’ websites.  BOARD rates are difficult to track as they are internal to the banks and there could be more than a single BOARD rate for different tranches of loans signed at different periods – it would be near impossible to track these as a third party.

Due to the spate of increases in FDR mortgage rates of late, we are seeing some people switching back to SIBOR-based home loans which are ranked above the FDR home loans in our ranking charts, in terms of the lowest average interest in the first three years.  This happens as a number of lenders now cut the spreads for SIBOR loans down to unprecendented lows of 0.25-0.35%.  This is like one-third of the typical spreads one would usually expect at 0.50-0.70% in the past.  Why the spreads can go so low is baffling to us and we think the margins are so thin that the banks are not making much money unless they can continue to acquire cheap source of sing dollar funding from retail deposits.  Until it ends, homeowners who like to switch back to SIBOR loans should capitalize on this window of opportunity when banks are slashing spreads to win market share.  It may not last that long as lenders realize price war benefits no one in the long run, except for those few quick-thinking homeowners who locked in the super-low spreads at the moment. Speak to our consultants to find out which SIBOR loan makes the most sense.

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As SIBOR has somewhat stabilized at the current levels of 1.82 for 1-month and 1.94 for 3-month (as at 25 Feb), the bigger question though is the pace of interest rate increases in the 2ndhalf of the year and if one should instead lock in fixed rates at 2.50% today.  No one has the crystal ball to unveil interest rates come 2020-2021.  We can only make calculated guess based on our views of US Fed actions (the single most important driver for SIBOR historically, see correlation chart). Speak to our consultants who can share with you more on our forecast and what else you need to look at when choosing between fixed or floating rate home loans.

Lastly remember to check back at this blog as we continue to report on all rate movements by lenders in Singapore when it comes to FDR home loans.  Work with the team at MortgageWise who not only tracks news and events affecting mortgage rates since 2014, but who calls you early to review your home loan rate. That way you always get to pre-empt any rate increments and lock down the lowest spreads or fixed rates should the uptrend continues.  Not to mention you also receive a $150 Refinancing Valuation Fee Offset, or a special rate of $1,800 Purchase Legal Fee (includes stamp duty & gst) when you choose to take the loan through us, both subject to min loan of $500,000. Terms and conditions apply. Speak to our consultants today.

 

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals.  That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.

 

Compare All Latest Rates 2019

 

 

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UOB OCBC DBS Mortgage

Local Banks’ Score Card 2018

As the three local banks have just reported their financial results for last quarter of 2018, let us take a look at the full year performance in 2018 for mortgages.

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DBS UOB OCBC Mortgage Book 2018

 

At the results briefing, it was reported DBS still enjoys a commanding share of 31% of the mortgage market in Singapore.  From MAS statistics on its website, we know the total mortgage market in Singapore as at end 2018 was at $207.5b based on total loans disbursed (exclude the insignificant bridging loans).  This means (we can only estimate) that DBS share of outstanding loans is at $64.3b which is 86% of its total mortgage loan book across all countries.

 

In the absensce of breakdowns on mortgages in Singapore vs other countries, we can only draw conclusions in this article based on the entire mortgage books for all three banks (across all countries) and assumed that over 80% of their mortgage portfolio comes from loans in Singapore, like what we have seen in the case of DBS above.

 

Overall, UOB exhibits the best performance in terms of loan books growth in 2018 whereas DBS grew the most in terms of NIM (net interest margin).  The latter is hardly surprising as DBS has access to the largest pool of cheap Sing dollar funds in its millions of POSB CASA (current account savings account) accounts base that is out of reach of the other two banks. With 3-month SIBOR rising significantly in the year from 1.12% at end-January to end the year at a high of 1.89% in December, DBS sees exploding interest income from being the net lender (to other banks) in the interbank market.  A look at its Sing dollar funds composite will reveal that CASA accounts contribute the lion’s share of 89% ($141.6b out of total $158.8b) of its source of funds.  On the other hand, fixed deposits of mere $17b contributes only 11%.  Remember the ubiquitous FHR (fixed deposit home rate) which is defined on smaller deposits of below $10,000 will account for even lesser of this $17b fixed deposit base.  We assume this could be less than 20% (pareto’s rule), ie. $3.4b.  This is why we have been saying any increases to FHR will hardly make a dent on the bank’s cost of funding.

 

On the contrary, fixed deposits form about half the source of funds for the other two local banks OCBC and UOB so the any increment to deposit rates would hit the bank’s bottom line a lot harder.  That is also why both lenders have since discontinued pegging their home loans to FDRs (fixed deposit rate) but reverts back to offering home loans tied to BOARD rates since middle of 2018.

 

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In terms of loans book, OCBC registered almost flat growth ending the year with the same $64b portfolio it started with.  UOB grew its loans book the most at $68b, closing the gap on market leader DBS’s $75b slightly (gap of $7b down from previous year’s gap of $8b).

 

Interestingly this year, with sentiments on the ground shifting back towards SIBOR packages from what we have seen so far, lenders who do not offer competitive SIBOR packages might see further challenges in growing their portfolio.  Foreign banks who have been nipping away market share from local banks of late with very aggressive pricing stand to make further inroads.  Still we do not expect local banks to sit still and do nothing and the battle for market share will likely intensify from second quarter of the year onwards.

 

Homeowners who keep their ears to the ground will stand to benefit from this brewing mortgage war, and there’s no better way to do that than engage the service of a professional mortgage broker who can supply the latest promotional rates for refinancing, plus additional perks.  At MortgageWise.sg, we offer the best comparison via our Rates Report that shows “whole of market” packages, and we bring you exciting cost savings like a $150 Valuation Fee Offset for refinancing and a $1,800 Legal Fee (inclusive of stamp duty & gst) for purchase, both subject to a minimum loan of $500,000. Speak to our consultants today!

 

 

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals.  That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.

 

Compare All Latest Rates 2019

 

 

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UOB home loan rates

UOB Last To Hike Rates

We have reported extensively on all rate adjustments by lenders in Singapore in the past year, being one of the top “go to” site for the latest home loan rates and all things on mortgages.  Last year 2018 ended with major across-the-board rate hikes by DBS (13 Dec 2018) and similarly by OCBC (announced in Dec but takes effect 16 Jan 2019).  It is therefore no surprise that, firing the first salvo in 2019, UOB is the last of the three local banks to play catchup on rates.

 

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We have noticed UOB’s published fixed deposit rates, to which their mortgages are tied to in the past (FDPR), have gone up this month in February although home loan customers have yet to see any increase to their monthly repayments as the bank would need to give a 1-month notice and letters would be going out soon:

BankMortgage PegOld RateNew RateIncrease ByEffective Date
UOB36FDPR1.001.650.6525 Mar
15FDPR0.701.400.7025 Mar
14FDPR0.601.150.551 Apr

By the time the new rates take effect, the first quarter of 2019 would have nearly passed.  UOB home loan customers would have enjoyed the longest delay to rising interest rates given how SIBOR has moved up significantly since the last rate hike by US Fed after December’s FOMC (1-month SIBOR rising from 1.63% to 1.82% and 3-month SIBOR from 1.76% to 1.95%, as at 13 Feb).

As UOB has now switched to offering mortgages in SIBOR or BOARD rates only, new customers to the bank are not affected, although we do not track any increases to BOARD rate which is internal to the bank.

Now that the three local banks, who collectively command more than 80% share of the local mortgage market, have announced widespread rate increases, we should expect foreign lenders to follow suit.  In fact, we know one foreign bank has made the announcement which we will be reporting in the coming month.

Compare All Latest Rates 2019

 

Another interesting observation is that even amongst the three local banks, the increases were uneven.  DBS made the first move in December but with the least average increases of only 0.15%, whereas both OCBC and UOB adjusted on the average by 0.50-0.60%.  In a way we think, this exemplifies the difference in cost structure (and hence cost pressures) between DBS and its two local counterparts, a point we have always highlighted in the past – DBS enjoys cost advantage with access to its huge CASA (current account, savings account) base of POSB accounts for cheap Sing dollar funding.  We speculated that this could also be the primary reason why both UOB and OCBC de-linked their mortgages from pegging to fixed deposit rates since last year.

Having said that, it is not inconceivable that DBS might make another move within the next six months in a “2-step” adjustment to level up with the market.  After all, its last increase at 0.15% was less than one-third of the other two local banks’ increases, and it was made even before Fed’s rate hike in December, which means it may not have factored in the latest run in SIBOR rates.  Another imperative for the bank to move again is that with US Fed likely to pause in rates hikes at least for first half of 2019, this could be the last opportunity for the bank to increase its NIM (net interest margin) against a backdrop of slower loans growth in 2019.

We cannot be 100% accurate in our prediction and forecast.  However, being an active participant in the mortgage industry tracking all news affecting interest rate, we make the best calculated guess and dispense what we believe is best advice for our clients at all times. And right now, as we approach possibly end-cycle over the next few years, there is a shift in our stance for mortgage recommendation.

Speak to our consultants today to find out more.  Plus, you get the best deal here at MortgageWise with our $150 Valuation Fee Offset for refinancing as well as a special $1,800 Legal Fee (includes stamp duty) for purchase, both subject to min loan of $500,000.

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals.  That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.

 

Compare All Latest Rates 2019

 

 

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HSBC mortgage loan

HSBC SmartMortgage

Many would have heard of interest offset loan in Singapore when it comes to mortgages, currently offered by three banks.  However, most either do not quite understand how it works, or could yet fully appreciate the true benefits of having such a feature in their home loan. With interest rate expected to continue to head north though at a slower pace, de-leveraging becomes a key theme going forward and it is timely now to review how interest offset works and why one should consider it.

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An interest offset mortgage loan is one where the bank provides concurrently a current account that pays the borrower back the same deposit interest rate as the mortgage rate charged, for up to a certain percentage of the amounts deposited with a cap set based on the outstanding mortgage loan at any point in time.  The interest earned on the qualifying deposit amounts every month is then used to “offset” against the interest charged on the mortgage loan hence resulting in the borrower reducing his loan more repaidly than otherwise.

We like to introduce HSBC’s SmartMortgage, with one of the highest qualifying deposits ratio of 70%, amongst the three banks with interest offset accounts in Singapore (StanChart at 67% and Citibank at 50%).

Let’s take it look at how it works by way of an example.  Assuming Mr. Tan just refinanced an outstanding loan of $700,000 to HSBC on a 25-year tenure that comes with the SmartMortgage current accout and below is a summary of the offseting effect should Mr. Tan deposit $200,000, $700,000 (equivalent amount to his loan) or even $1,000,000 into his SmartMortgage current account.

HSBC SmartMortgage interest offset loan

Notice how the interest earned on the qualifying deposits is now used to “offset’ against the interest component in the monthly repayment so that more of it goes towards reducing the principal loan.  Mr. Tan still pays the same mortgage repayment every month of $2,967.  In scenario A where there is no interest offset current account, he would be paying approximately 40% of that as interest to the bank.  In scenario B when he deposits $200,000 of his idle funds into his SmartMortgage account, he reduces this interest costs by 20% from $1,167 to $933 which has the same effect of reducing his mortgage interest rate by 20% from 2% to 1.6%.  What happens if Mr. Tan deposits the equivalent amount to his loan of $700,000 idle funds into SmartMortgage?  That would be scenario C where his interest component is further reduced to $349 which effectively means he is paying only 0.60% on his home loan.  In the last scenario D when Mr. Tan deposits $1m idle funds into SmartMortgage, his mortgage interest offset remains the same as the bank has capped the maximum offset at 70% of the outstanding loan, ie. $490,000.

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Now one wonders why would someone with idle funds of $700,000 still need to take up a home loan of $700,000 with the bank?  That depends on one’s objective.  We will look at four key benefits of an interest offset loan with HSBC’s SmartMortgage?

1. Added Assurance When Choosing Floating Rate Over Fixed Rate Home Loan

As the gap between the lowest floating rate (currently at 2%) and the lowest fixed rate (currently at 2.48% for private properties) widens significantly in recent months, more homeowners are caught between a rock and a hard place.  On one hand, there is reluctance to sign for fixed rate at such high levels unseen in Singapore for the past decade lest one ends up with a lemon should global recession hits and rates come tumbling down; on the other hand, there is fear of runaway interest rates if left unhedged with a fixed rate home loan.

An interest offset loan becomes a very useful mitigating weapon at one’s disposal in such a situation.  When choosing a floating rate over fixed, one does not have to lose control totally even with rising interest rates as interest costs can be lowered by parking idle funds into the SmartMorgtgage account as we have seen in scenario B above (placing $200,000 deposit reduces the interest cost to $933 in the 1stinstalment which is exactly how much interest will be charged when the same loan of $700,000 is signed at 1.60%, instead of 2%)

2. Reducing Interest Costs Without Doing Actual Prepayment

Most of us will not have so much idle funds to do a scenario C where one could effectively pay down the loan in full. But many would have some kind of rainy-day funds in cash.  With rising mortgage rates, more people will want to de-leverage but it may not always be feasible to do partial prepayment as there is penalty during the lock-in period.

An interest offset loan has the same effect as prepayment when idle funds are deposited anytime to offset against monthy interest costs, without attracting a prepayment penalty.

3. Access To Liquidity With Minimal Cost

Now even if one has all the funds to fully redeem and discharge a loan, depleting all liquidity on hand requires careful deliberation.  What if one suddenly needs access to a cheap source of funds for emergencies or some unexpected situations like a change in one’s income position which makes it now difficult to apply back for term loan.  Don’t forget it’s harder to get the same quantum on a term loan as it entails more risk for the bank which grants a much-reduced loan amount after deducting CPF usage on the property.

Compare that with parking one’s idle funds in an interest offset account – there is no need for such prolonged deliberation as withdrawing funds for use in emergencies is as easy as putting money in with no restrictions whatsoever like a savings account!  For high networth individuals or seasoned investors, this access to liquidity is highly valued when a day’s delay could make or break a deal or cause one to pass up on an opportunity to snatch a steal (stock market corrections, distressed property sale, etc).

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In fact, there is another good reason why one may not want to pay down fully on a mortgage – for estate planning where one could take up a mortgage insurance through having a home loan, thereby creating another set of inheritance in event of claims while still holding on to one’s cash. We will discuss that in a later article.

To balance things up, this access to liquidity does come with some minimal costs.  In scenario C above, by choosing not to fully paydown and discharge the loan, Mr. Tan is effectively “pre-paying” $490,000 and still service an interest of 2% p.a. on $210,000 (or put in another way – 0.60% p.a. on $700,000).  He also gave up the deposit interest he would have earned on $210,000 had he actually use $490,000 of his funds to prepay the loan and puts the remaining into a fixed deposit account.  Still, this combined cost of likely not more than  1% p.a. could be easily beaten with good timing on entry and exit points for investments.

4. No Loading On Interest Rate With SmartMortgage

The best part about HSBC’s SmartMortgage is that it does not load additional spread or interest on the floating rate home loan packages that the bank is offering at the moment.  This makes it an excellent choice for those who like to bet on floating rates staying low or going up very gradually, yet retain a level of control on how much interest costs to service very month through an interest offset account.

And HSBC is offering very competitive spreads on SIBOR-based home loans starting from +0.25% right now, along with some other very compelling benefits which our consultants would love to share with you. And don’t forget when you take your home loan through us here at MortgageWise, we also offer you real savings in transaction costs for both purchase (special legal fee of $1,800 net including mortgage stamp duty & gst) and refinancing ($150 valuation fee offset).  Both subject to a minimum loan of $500,000.

So, speak to us today!

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals. That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.

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board rate or sibor rate

Review Of FDR Interest Hikes In 2018

With the spate of increases in fixed deposit rates in Singapore last year leading to higher mortgage repayments for many homeowners who have chosen to peg their home loan rate to FDR (fixed deposit rate) mortgge pegs from the various banks, I thought it would be timely to take stock as we begin another year.

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First, a recap of what is FDR (fixed deposit rate) home loans?  DBS pioneered this unique mortgage peg back in June 2014 when it started pegging the interest rate it charges for its home loans to a pre-designated fixed deposit rate tenure (eg.12-month, 18-month, 24-month) of deposits between $1,000-9,999 published on its website and called it FHR (fixed deposit home rate).  It gained traction in the market after a year and more banks followed suit with their own versions going by different names from FDMR (OCBC & Maybank), FDPR (UOB), FDR (SCB) to TDMR (HSBC).  At MortgageWise, we refer to these collectively as FDR home loans and track their movements closely over the years (see our chart).  However, with rising cost of funds, a few banks (OCBC, UOB, Maybank) have pulled the plug on FDRs and replaced them with traditional BOARD rates since 2018.  Curently only three banks still offer FDR home loans in the market: DBS, SCB and HSBC.

Now let us take a look at the many rounds of adjustments to FDR pegs by banks 2018 (in chronological order):

BankMortgage PegOld RateNew RateIncrease ByEffective Date
DBSFHR180.600.800.201 Feb
SCB48FDR0.500.900.406 Feb
MYBFDMR361.201.400.2010 Feb
OCBC15FDMR
48FDMR
0.25
0.95
0.55
1.25
0.30
0.30
1 Mar
UOB36FDPR0.651.000.355 Mar
DBSFHR90.250.500.259 May
FHR
(ave 12/24M)
0.675
0.35(12M)
1.00 (24M)
0.80
0.60(12M)
1.00 (24)
0.1259 May
MYBFDMR361.401.800.4026 Jun
OCBC36FDMR0.650.950.302 Aug
UOB15FDPR0.250.700.4527 Jul
14FDPR0.250.600.3527 Jul
DBSFHR80.200.500.3024 Aug
FHR90.500.800.3024 Aug
FHR
(ave 12/24M)
0.80
0.60 (12M)
1.00 (24M)
0.975
0.80 (12M)
1.15 (24M)
0.17524 Aug
FHR180.800.950.1524 Aug
SCB48FDR0.901.100.208 Nov
9FDR0.300.650.358 Nov
36FDR0.720.970.258 Nov
DBSFHR
(ave 12/24M)
0.975

0.80 (12M)
1.15 (24M)

1.075
0.95 (12M)
1.20 (24M)
0.1013 Dec
FHR180.951.100.1513 Dec
FHR90.800.950.1513 Dec
FHR80.500.6750.17513 Dec
OCBC15FDMR0.551.250.7016 Jan 2019
36FDMR0.951.550.6016 Jan 2019
48FDMR1.251.750.5016 Jan 2019

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Note we included the latest hike for OCBC as part of 2018 review as it was announced back in December even though it took effect only in 2019 (this week).

With the many round of increases, it is easy to lose track of the total increases in the year for each FDR tranche so we summarize them below indicating the value at the start and end of the year (including HSBC which make no adjustment in 2018):

BankMortgage Peg*Value At 1 JanValue At 31 DecTotal Increase 2018
DBSFHR
(ave 12/24M)
0.675
0.35(12M)
1.00 (24M)
1.075
0.95 (12M)
1.20 (24M)
0.40
FHR180.601.100.50
FHR90.250.950.70
FHR80.200.6750.475
OCBC15FDMR0.251.251.00
36FDMR0.651.550.90
48FDMR0.951.750.80
UOB36FDPR0.651.000.35
15FDPR0.250.700.45
14FDPR0.250.600.35
MYBFDMR361.201.800.60
SCB48FDR0.501.100.60
9FDR0.300.650.35
36FDR0.720.970.25
HSBCTDMR240.650.650.00

The value in bold represents the current value of the mortgage peg.  The increases in the year fluctuates widely from 0.25% to 1.00% so it is hard to draw an average.  The only bank which never adjusted its FDR peg was HSBC with its TDMR24 launched to the market back in Dec 2017.  This means that those lucky few who signed onto HSBC floating rate packages earlier would still be paying around 1.65-1.78% today, even going into the 2ndyear of their loan tenure.  We do however expect one hike from the bank this year in 2019.

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To put in perspective, the benchmark 3-month SIBOR has also moved up in 2018 following four rate hikes from the US Federal Reserve to end the year at 1.886%. It seems the banks moved quite quickly on FDRs to level up with the general rise in benchmark lending rates.

Does FDR home loans still make sense?  That depends.  There are couple of factors to weigh in like the outstanding loan amount, pace of interest rate increases going forward, intention of sale of property or to do partial prepayment, etc. Speak to our team of very experienced mortgage consultants who have assisted thousands of happy clients make that right choice on the type of home loan to refinance to and why.

After all we are the few, or quite possibly, the only mortgage consultancy firm in the industry that tracks both macro events in the financial markets (that impacts interest rate) as well as interest rate movements per se so that we can give that professional and calculated view to our clients.  You may also like to read our general forecast of rate movement in 2019.  And don’t forget you will get a $150 Refinancing Valuation Fee Offset (for min loan $500,000) when you choose to apply for the same home loan package through MortgageWise.  It’s our way of helping clients to defray some of the costs involved in refinancing.  For more in-depth advice and mortgage strategies as we approach end-cycle, contact us today.

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals.  That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.

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OCBC FDMR Home Loan

OCBC Hikes Home Loan Rates Across The Board

Following after DBS, last week OCBC announced hikes across most of its mortgage loan base (except for SIBOR home loans which are market-driven and already risen) of approximately 0.55%, which is to take effect on 16 January 2019.  With two out of the three major mortgage lenders in Singapore announcing increases in its mortgage interest rate in the month of December which also saw US Federal Reserve hiking rates to near 2.50% in the US, there is no prize for guessing who will be the next to announce hikes.

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Here’s a snapshot of the tranches affected:

Mortgage Pegs

 

Old ValueNew ValueIncrease ByEffective Date
15FDMR0.55%1.25%0.70%16 Jan 2019
36FDMR0.95%1.55%0.60%16 Jan 2019
48FDMR1.25%1.75%0.50%16 Jan 2019

Being a thought leader in the mortgage space in Singapore, we take it upon ourselves to track any movements in the home loans market by any lenders when they make announcements on changes to their published mortgage rates – primarily FDR or fixed deposit rate mortgage pegs.  The complexity of tracking increases when it comes to BOARD rates which are internal lending rates not published anywhere on the bank’s website.  We only hear about such increases from customers we spoke with.

MortgageWise will only be able to track the 5-year historical trending of FDRs from the various banks and map the movements of a single FDR tranche (initial launch tranche) from each bank against the benchmark 3-month SIBOR which you can find it here (OCBC’s latest increases reflected only after 16 January 2019).

With the latest round of rate adjustments from banks in December, most homeowners on floating rates would likely see their mortgage interest rising up to near 2%-2.20% level by our estimates, which is basically in-line with the prevailing floating rates (use our interactive Rates Display below to see the latest fixed and floating rates).

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We will give our take on how we see interest rate moving in 2019 when we come back in the new year, so stay tuned to this blog.

At this moment, we do sense there is some resistance to refinancing to fixed rates which starts at 2.33-2.38%.  Not surprising given how much fixed rates have risen over the months.  And with uncertainties looming large in the global economy from trade rows between US and China, potential Brexit fallout from EU, a slowing economy in China, etc, we see more homeowners taking bets on floating rate home loans as we end the year with a stock market rout.  One thing for sure, it is getting harder to forecast on interest rate movements.

If your lock-in is expiring within the next six months or so, why not contact us now to stay abreast of the latest mortgage promotions from the various banks in 2019.  With a trusted mortgage advisor giving you the latest scoops on rate hikes and deviated rates promotion (for a limited period), you keep all your options open in a volatile market, be it fixed or floating rate home loans.

Since 2014, MortgageWise.sg has provided thought leadership in the mortgage planning space in Singapore, taking deep dives into the latest developments in the industry, providing useful mortgage tips, and making sense of rate movements.  We seek to build trust with clients over the longer term instead of doing product-peddling for quick one-time deals.  That’s why we always present “whole-of-market” perspective including home loan packages that some banks do not pay us.  Read our clients’ testimonials.

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Home Loan Best Deal

Best Home Loans In Singapore

Last Updated 1-Dec-2018

As the year winds down to a close, we thought we would do a review and update of the best home loans in Singapore in each of the category below (see Table of Content) as we near the 4th and final rate hike by US Fed in 2018 in its December FOMC.  This means that potentially we could see another spurt of rate adjustments by all major mortgage lenders as we start off the year in 2019, especially if 3-month SIBOR makes its dash to cross the all-important 2% level in the final weeks of 2018.

Hence, this review would be timely for those who are back from year-end vacations, to take this lull period from work to do a serious review of their mortgages, especially for those with lock-ins expiring in the 1st half of 2019 by 30 Jun. Contact us for an obligation-free discussion.  For a home loan of $700,000 at an average interest over 25 years at 3.5%, when serviced to the very end of the tenure, the total interest paid to the bank would add up to $351,310, almost 50% of the original loan amount borrowed!  It is important to make sure you always sign onto best housing loan package with the lowest interest and best overall terms, be it you refinance or stay put with your current bank.  Let us help you achieve that.

As this post can only be updated periodically (see last updated date at top), we have input all the interest rate raw data from all major 16 mortgage lenders in the market and churn out the latest and most updated housing loan packages using our interactive Rates Display widget which you can access throughout this post or on our website:

Compare All Latest Rates 2019

 

Table Of Content

A. What Are The Different Types Of Home Loans & Mortgage Pegs?
B. Best Floating Rate (FDR/BOARD) Home Loans For Private Property
C. Best Floating Rate (SIBOR) Home Loans For Private Property
D. Best Fixed Rate Home Loans For Private Property
E. Best Home Loans For Private Property BUC (Building Under Construction)
F. Best Floating Rate (FDR/BOARD) Home Loans For HDB
G. Best Floating Rate (SIBOR) Home Loans For HDB
H. Best Fixed Rate Home Loans For HDB
I. Overview Of All Best Home Loans Across The Board

 

A. What Are The Different Types Of Home Loans And Mortgage Pegs?

In 2018, with removal of FDR (Fixed Deposit Rate) home loans by some banks, only 3 banks now offer such home loans pegged to a pre-designated sing dollar fixed deposit tranche rate:  DBS with its FHR8 (Fixed Deposit Home Rate), StanChart with its 36FDR, and HSBC with its 24TDMR (Time Deposit Mortgage Rate).  By and large, in view of rising rates in 2018, most homeowners have scurried to sign on fixed rate home loan this year, or at least take a bet on floating rate with the FDR mortgage peg which has proven to be a laggard and more stable alternative to SIBOR, notwithstanding the few rounds of rate hikes on FDR this year (see our chart on the tracking of FDR movements)

In general the three types are mortgage pegs used in Singapore are FDR, SIBOR, and the traditional BOARD rate set by banks.  FDR, being fixed deposit rates, are also set by banks but are published on banks’ website which makes them more transparent than BOARD.  SIBOR offers the most transparency as it is a rate administered by ABS (Association of Banks in Singapore) and determined solely by market forces in the interbank and hence no one single bank could unilaterally raise its value.

 

B. Best Floating Rate (FDR/BOARD) Home Loans For Private Property

Floating rate, as opposed to fixed rate, is when the interest rate is “reset” each time there is a change in the value of the underlying mortgage peg which can be FDR, BOARD or SIBOR.  The “spread”, or the mark-up above this peg to derive the final interest charged, is a contracted rate which will not change.  We will look at SIBOR as a category separately.

With general interest rate staying low below 2% in the past few years, floating rate home loans have been popular in Singapore until 2018, when fixed rate home loan become the preferred choice for most.

At the prevailing floating rate of 2.00%, for every $100,000 of outstanding loan, the monthly instalment works out to $423.85 on a tenure of 25 years. So for a typical home loan of $700,000, monthly instalment will come to $2,967.

Updated as at 6-Aug-2019new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan
Loan TypeDBS Floating FDROCBC Floating BOARDUOB Floating BOARDHSBC Floating FDRSCB Floating FDRMAYBANK Floating BOARD
Loan PegFHR8 = 0.95%MBR = 1.55%MR = 0.85%TDMR24 = 1.40%36FDR = 1.22%BOARD = 4.85%
Year 1FHR8 + 1.13% = 2.08%MBR + 0.75% = 2.30%MR + 1.53% = 2.38%TDMR24 + 0.98% = 2.38%36FDR + 0.88% = 2.10%BOARD - 2.55% = 2.30%
Year 2FHR8 + 1.13% = 2.08%MBR + 0.75% = 2.30%MR + 1.53% = 2.38%TDMR24 + 1.08% = 2.48%36FDR + 0.88% = 2.10%BOARD - 2.55% = 2.30%
Year 3FHR8 + 1.13% = 2.08%MBR + 0.75% = 2.30%MR + 1.53% = 2.38%TDMR24 + 1.18% = 2.58%36FDR + 0.88% = 2.10%BOARD - 2.55% = 2.30%
Year 4 & ThereafterFHR8 + 1.13% = 2.08%MBR + 0.75% = 2.30%MR + 1.65% = 2.50%TDMR24 + 1.38% = 2.78%36FDR + 0.88% = 2.10%BOARD - 2.27% = 2.58%
Lock-In Period2 years2 years2 years2 years2 years2 years
Partial Redemption Penalty1.50%Nil (up to 50%)Nil (left $200K)1.50%1.50%1.50%
Full Redemption Penalty1.50%1.50%1.50%1.50%1.50%1.50%
Legal Subsidy/RebateYesYes0.40% of loanYesYes0.40% of loan
Subsidy Cap At$1,800$2,000$1,800$2,000$1,800$2,000
Min. Loan (for subsidy)$500,000$500,000$100,000$500,000$400,000$100,000
new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan

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C. Best Floating Rate (SIBOR) Home Loans For Private Property

As the value of SIBOR has increased since the start of the year, even though banks have noticeably reduced the spread above this SIBOR peg, the final rate is now averaging 1.8% to 1.9%.

Generally those with a more dovish view on rates would consider taking on a SIBOR based housing loan as it would be the first to rise in any event of further tightening of liquidity in the market when US Fed continues on its current trajectory of rate hike.  Should the gap between fixed and floating continue to widen, more may be drawn to the more transparent floating rate after suffering couple of rate hikes on FDR mortgage peg in the past.  After all, should there be a reversal and global economy slides into recession because of trade war, SIBOR would also be the first to come down.

Some of the best home loans based on 1-month and 3-month SIBOR for the current month are summarised below:

Updated as at 6-Aug-2019new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan
Loan TypeOCBC Floating SIBORCITIBANK Floating SIBORHSBC Floating SIBORSCB Floating SIBORCIMB Floating SIBOR
Loan Peg1-month SIBOR1-Month SIBOR1-Month SIBOR1-Month SIBOR1-Month SIBOR
Year 11-month SIBOR + 0.30%1-month SIBOR + 0.25%1-month SIBOR + 0.25%1-month SIBOR + 0.30%1-month SIBOR + 0.20%
Year 21-month SIBOR + 0.40%1-month SIBOR + 0.25%1-month SIBOR + 0.25%1-month SIBOR + 0.30%1-month SIBOR + 0.20%
Year 31-month SIBOR + 0.50%1-month SIBOR + 0.40%1-month SIBOR + 0.35%1-month SIBOR + 0.35%1-month SIBOR + 0.20%
Year 41-month SIBOR + 0.60%1-month SIBOR + 0.55%1-month SIBOR + 0.75%1-month SIBOR + 0.50%1-month SIBOR + 0.60%
Year 51-month SIBOR + 0.60%1-month SIBOR + 0.55%1-month SIBOR + 0.75%1-month SIBOR + 0.50%1-month SIBOR + 0.60%
Year 6 & Thereafter1-month SIBOR + 0.60%1-month SIBOR + 0.55%1-month SIBOR + 0.75%1-month SIBOR + 0.50%1-month SIBOR + 0.60%
Lock-In Period2 years2 years2 years2 years2 years
Partial Redemption PenaltyNil (up to 50%)Nil (left $200K)1.50%1.50%1.50%
Full Redemption Penalty1.50%1.50%1.50%1.50%1.50%
Legal Subsidy/RebateYes0.40% of loanYesYes0.40% of loan
Subsidy Cap At$2,000$1,800$2,000$1,800$2,000
Min. Loan$500,000$600,000$800,000$500,000$1,000,000
new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan

Compare All Latest Rates 2019

 

D. Best Fixed Rate Home Loans For Private Property

Fixed rates has proven to be popular in 2018 against the backdrop of 3-month SIBOR rising from 1.12% to current 1.76% (as at Nov-2018) and banks  adjusting up their FDR rates repeatedly leaving many homeowners wary of floating rate home loans.

However, now that fixed rates are all above 2% psychological level, and with more uncertainties present in the global economy now due to trade wars, it will be interesting to watch how the market responds to the question of fixed versus floating rate mortgage.  Generally, a fixed rate in the range of 2% to 2.30% is still historically low and below the long-term neutral rate of 2.50%-3.00% that US Fed is trying to achieve by end of 2019.

At the lowest 2-year fixed rate of 2.10% , for every $100,000 of outstanding loan, the monthly instalment works out to $428.74 on a tenure of 25 years. So for a home loan of $700,000, monthly instalment will come to $3,001.

Updated as at 6-Aug-2019new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loanindia bank housing loannew purchase housing loan
Loan TypeDBS Fixed RateOCBC Fixed RateUOB Fixed RateHSBC Fixed RateMAYBANK FixedBANK OF CHINA FixedSTATE BANK INDIA FixedCITIBANK Fixed
Loan PegFHR8 = 0.50%MBR = 1.55%1M SIBOR1M SIBORSRFR2 = 4.50%3M SIBORBOARD = 6.00%1M SIBOR
2-Year FixedY1: 2.38% (Fixed)Y1: 2.58% (Fixed)Y1: 2.48% (Fixed)Y1: 2.50% (Fixed)Y1: 2.48% (Fixed)Y1: 2.10% (Fixed)Y1: 2.15% (Fixed)Y1: 2.28% (Fixed)
Y2: 2.38% (Fixed)Y2: 2.58% (Fixed)Y2: 2.48% (Fixed)Y2: 2.50% (Fixed)Y2: 2.48% (Fixed)Y2: 2.10% (Fixed)Y2: 2.15% (Fixed)Y2: 2.28% (Fixed)
3-Year FixedY1: 2.68% (Fixed)nilY1: 2.68% (Fixed)Y1: 2.65% (Fixed)nilY1: 2.25% (Fixed)nilY1: 2.48% (Fixed)
Y2: 2.68% (Fixed)nilY2: 2.68% (Fixed)Y2: 2.65% (Fixed)nilY2: 2.25% (Fixed)nilY2: 2.48% (Fixed)
Y3: 2.68% (Fixed)nilY3: 2.68% (Fixed)Y3: 2.65% (Fixed)nilY3: 2.25% (Fixed)nilY3: 2.48% (Fixed)
Lock-In Period2/3 years2 years2/3 years2/3 years2 years2/3 years2/3 years2/3 years
Partial Redemption Penalty1.50%1.50%1.50%1.50%1.50%1.75%1.50%1.50%
Full Redemption Penalty1.50%1.50%1.50%1.50%1.50%1.75%1.50%1.50%
Legal Subsidy/RebateYesYes0.40% of loanYes0.40% of loanYes0.40% of loan0.20% of loan
Subsidy Cap At$2,000$2,000$1,800$2,000$2,000$1,800$1,000$2,500
Min. Loan (for subsidy)$500,000$500,000$100,000$800,000$100,000$500,000$250,000$100,000
new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan

Compare All Latest Rates 2019

 

E. Best Home Loans For Private Property BUC (Building Under Construction)

There is no fixed rate for properties under construction and one can only apply for a free conversion within the bank (usually included as a feature) to a fixed rate home loan when it is near to T.O.P, or usually within 3-6 months of T.O.P.

The good news though is that as competition for new purchase loans at all the property launches and showflats are intense, banks would normally reduce their spread on such floating rate home loans when compared to those for completed properties.

At the prevailing floating rate of 1.95% for BUC properties, for every $100,000 of outstanding loan, the monthly instalment works out to $421.42 on a tenure of 25 years. So for a typical home loan of $700,000, monthly instalment will come to $2,950.

Updated as at 6-Aug-2019new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan
Loan TypeDBS Floating FDROCBC Floating BOARDUOB Floating BOARDSCB Floating FDRMAYBANK Floating BOARD
Loan PegFHR8 = 0.95%MBR = 1.55%MR = 0.85%36FDR = 1.22%BOARD = 4.85%
Year 1FHR8 + 1.20% = 2.15%MBR + 0.52% = 2.07%MR + 1.30% = 2.15%36FDR + 0.88% = 2.10%BOARD - 2.55% = 2.30%
Year 2FHR8 + 1.20% = 2.15%MBR + 0.52% = 2.07%MR + 1.30% = 2.15%36FDR + 0.88% = 2.10%BOARD - 2.55% = 2.30%
Year 3FHR8 + 1.20% = 2.15%MBR + 0.52% = 2.07%MR + 1.30% = 2.15%36FDR + 0.88% = 2.10%BOARD - 2.55% = 2.30%
Year 4 & ThereafterFHR8 + 1.20% = 2.15%MBR + 0.52% = 2.07%MR + 1.30% = 2.15%36FDR + 0.88% = 2.10%BOARD - 2.37% = 2.48%
Lock-In PeriodNilNilNilNilNil
Partial Redemption PenaltyNilNilNilNilNil
Full Redemption PenaltyNilNilNilNilNil
Cancellation Fee0.75%0.75%0.75%1.50%1.50%
Legal Subsidy/RebateNilNilNilNilNil
Subsidy Cap AtNilNilNilNilNil
Min. Loan$100,000$200,000$100,000$100,000$100,000
new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan

Compare All Latest Rates 2019

 

F. Best Floating Rate (FDR/BOARD) Home Loans For HDB

Floating rates for HDB property would usually be similar to that for private property in general.  The main difference between the two comes in the form of much lower legal subsidy or cash rebate given, which then increases the overall costs for refinancing from one bank to another.

For this reason, we tend to advise HDB clients to reprice especially for outstanding home loans of below $300,000 which is the minimum loan size for us to broker.  And we have good reasons for that which you may like to read in the form of a case study here.

At the prevailing floating rate of 2.00%, for every $100,000 of outstanding loan, the monthly instalment works out to $423.85 on a tenure of 25 years. So for a typical HDB home loan of $350,000, monthly instalment will come to $1,484.

Updated as at 6-Aug-2019new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan
Loan TypeDBS Floating FDROCBC Floating BOARDUOB Floating BOARDHSBC Floating FDRSCB Floating FDRMAYBANK Floating BOARD
Loan PegFHR8 = 0.95%MBR = 1.55%MR = 0.85%TDMR24 = 1.40%36FDR = 1.22%BOARD = 4.85%
Year 1FHR8 + 1.13% = 2.08%MBR + 0.75% = 2.30%MR + 1.53% = 2.38%TDMR24 + 0.98% = 2.38%36FDR + 0.88% = 2.10%BOARD - 2.55% = 2.30%
Year 2FHR8 + 1.13% = 2.08%MBR + 0.75% = 2.30%MR + 1.53% = 2.38%TDMR24 + 1.08% = 2.48%36FDR + 0.88% = 2.10%BOARD - 2.55% = 2.30%
Year 3FHR8 + 1.13% = 2.08%MBR + 0.75% = 2.30%MR + 1.53% = 2.38%TDMR24 + 1.18% = 2.58%36FDR + 0.88% = 2.10%BOARD - 2.55% = 2.30%
Year 4 & ThereafterFHR8 + 1.13% = 2.08%MBR + 0.75% = 2.30%MR + 1.65% = 2.50%TDMR24 + 1.38% = 2.78%36FDR + 0.88% = 2.10%BOARD - 2.27% = 2.58%
Lock-In Period2 years2 years2 years2 years2 years2 years
Partial Redemption Penalty1.50%Nil (up to 50%)Nil (left $200K)1.50%1.50%1.50%
Full Redemption Penalty1.50%1.50%1.50%1.50%1.50%1.50%
Legal Subsidy/RebateYesYes0.40% of loanYesYes0.40% of loan
Subsidy Cap At$1,800$1,800$1,800$1,000$1,800$2,000
Min. Loan$200,000$300,000$80,000$200,000$400,000$100,000
new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan

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G. Best Floating Rate (SIBOR) Home Loans For HDB

SIBOR home loans, being a transparent mortgage peg, can actually work quite well for HDB homeowners as over the long term where business cycles swing up and down, homeowners may pay more initially when rate rises but the reverse is also true when SIBOR comes down first and they will reap the savings immediately.

The main concern is still that of refinancing costs for smaller loan sizes and hence homeowners are better off on a SIBOR floating rate with a constant and long-term low spread.

Some of the best SIBOR-based home loans for HDB are summarised here:

Updated as at 6-Aug-2019new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan
Loan TypeOCBC Floating SIBORCITIBANK Floating SIBORHSBC Floating SIBORSCB Floating SIBORCIMB Floating SIBOR
Loan Peg1-month SIBOR1-Month SIBOR1-Month SIBOR1-Month SIBOR1-Month SIBOR
Year 11-month SIBOR + 0.30%1-month SIBOR + 0.25%1-month SIBOR + 0.25%1-month SIBOR + 0.30%1-month SIBOR + 0.20%
Year 21-month SIBOR + 0.40%1-month SIBOR + 0.25%1-month SIBOR + 0.25%1-month SIBOR + 0.30%1-month SIBOR + 0.20%
Year 31-month SIBOR + 0.50%1-month SIBOR + 0.40%1-month SIBOR + 0.35%1-month SIBOR + 0.35%1-month SIBOR + 0.20%
Year 41-month SIBOR + 0.60%1-month SIBOR + 0.55%1-month SIBOR + 0.75%1-month SIBOR + 0.50%1-month SIBOR + 0.60%
Year 51-month SIBOR + 0.60%1-month SIBOR + 0.55%1-month SIBOR + 0.75%1-month SIBOR + 0.50%1-month SIBOR + 0.60%
Year 6 & Thereafter1-month SIBOR + 0.60%1-month SIBOR + 0.55%1-month SIBOR + 0.75%1-month SIBOR + 0.50%1-month SIBOR + 0.60%
Lock-In Period2 years2 years2 years2 years2 years
Partial Redemption PenaltyNil (up to 50%)Nil (left $200K)1.50%1.50%1.50%
Full Redemption Penalty1.50%1.50%1.50%1.50%1.50%
Legal Subsidy/RebateYes0.40% of loanYesYes0.40% of loan
Subsidy Cap At$2,000$1,800$2,000$1,800$2,000
Min. Loan$500,000$600,000$800,000$500,000$1,000,000
new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan

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H. Best Fixed Rate Home Loans For HDB

As there are some banks that do not cater to HDB segments, or they have more attractive fixed rates only for loans above $500,000, HDB homeowners may find their fixed rates at the higher end of what is available in the market.

Exercise caution when selecting the best fixed rate for HDB as when the fixed rate term ends, the loan often reverts to a much higher floating rate which means homeowners would then need to incur high costs to refinance out should repricing terms not be favourable.  All such transaction costs would erode the potential savings of signing for a fixed rate home loan in the first place.  The best situation to go into a fixed rate is when the longer-term floating rate is still fairly attractive, or when there are plans to sell off the HDB at the end of the 2 or 3-year fixed term.

At the prevailing floating rate of 1.88%, for every $100,000 of outstanding loan, the monthly instalment works out to $418.04 on a tenure of 25 years. So for a typical HDB home loan of $350,000, monthly instalment will come to $1,463.

Updated as at 6-Aug-2019new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loanindia bank housing loannew purchase housing loan
Loan TypeDBS Fixed RateOCBC Fixed RateUOB Fixed RateHSBC Fixed RateMAYBANK FixedHONG LEONG FINANCESTATE BANK INDIA FixedCITIBANK Fixed
Loan PegFHR8 = 0.95%MBR = 1.55%1M SIBOR1M SIBORFDMR36 = 2.05%BOARD = 4.65%BOARD = 6.00%1M SIBOR
2-Year FixedY1: 2.38% (Fixed)Y1: 1.98% (Fixed)Y1: 2.28% (Fixed)Y1: 2.10% (Fixed)Y1: 2.28% (Fixed)Y1: 2.18% (Fixed)Y1: 2.50% (Fixed)Y1: 2.06% (Fixed)
Y2: 2.38% (Fixed)Y2: 2.08% (Fixed)Y2: 2.35% (Fixed)Y2: 2.10% (Fixed)Y2: 2.28% (Fixed)Y2: 2.38% (Fixed)Y2: 2.50% (Fixed)Y2: 2.06% (Fixed)
3-Year FixedY1: 1.89% (Fixed)nilY1: 2.35% (Fixed)Y1: 2.15% (Fixed)Y1: 2.33% (Fixed)Y1: 2.50% (Fixed)nilY1: 2.75% (Fixed)
Y2: 2.18% (Fixed)nilY2: 2.40% (Fixed)Y2: 2.15% (Fixed)Y2: 2.33% (Fixed)Y2: 2.60% (Fixed)nilY2: 2.75% (Fixed)
Y3: 2.18% (Fixed)nilY3: 2.45% (Fixed)Y3: 2.15% (Fixed)Y3: 2.40% (Fixed)Y3: 2.75% (Fixed)nilY3: 2.75% (Fixed)
Lock-In Period2/3 years2 years2/3 years2/3 years2 years2/3 years2/3 years2/3 years
Partial Redemption Penalty1.50%1.50%1.50%1.50%1.50%1.50%1.50%1.50%
Full Redemption Penalty1.50%1.50%1.50%1.50%1.50%1.50%1.50%1.50%
Legal Subsidy/RebateYesYes0.40% of loanYes0.40% of loanNil0.40% of loan0.20% of loan
Subsidy Cap At$1,800$1,800$1,800$1,000$2,000Nil$1,000$2,500
Min. Loan$200,000$300,000$200,000$200,000$100,000$100,000$250,000$600,000
new purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loannew purchase housing loan

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I. Overview Of All Best Home Loans Across The Board

To summarize all the best home loan rates and data points we have presented so far, below is an overview for what one may consider when seeking a new purchase home loan or refinancing this month.

25-Nov-2018Best Fixed Rate Home Loans

 

Best Floating Rate Home Loans
(on FDR/BOARD)
Private Property (Completed)

 

 

2.10% -2.30%BOC, SBI, MAYBANK1.88% – 2.08%DBS, UOB, OCBC, SCB
Private Property (BUC)

 

 

NANil1.90% – 1.95%SCB, DBS, UOB, OCBC, MAYBANK
HDB (Resale)

 

 

 

1.88% – 2.30%BOC, SBI, MAYBANK1.88% – 2.08%DBS, UOB, OCBC, SCB

 

 

 

We have provided a brief summary of the best home loans in Singapore in the month of November 2018.

We hope this would be useful for your comparison as we try to present the most salient information (rates, lock-in, legal subsidy, etc) of each home loan package neatly in a table form.  However, do note that as rates are dynamic in nature, we are unable to re-generate this table on a daily basis and the best way to access the most up-to-date information is still to use our interactive Rates Display below and to speak to us today for an obligation-free chat!  We can even run the numbers to show you how much is your potential interest savings when you refinance through us, and enjoy our special rewards like a $200 Refinancing Valuation Fee Offset, or a special Purchase Legal Fee of $1,800 all-in (including stamp duty, gst).

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