DBS has announced on its website it is raising its fixed deposit rates from 7-month to 60-month on 13 December.

Source: DBS website

What this means for homeowners whose mortgages are with DBS is that they are about to see a slight increase on their monthly repayment come next month, unless they have opted for fixed rates.  DBS home loan rates are tied to its popular FHR (Fixed Deposit Home Rate) mortgage peg.

In our opinion this round of increases on DBS home loan rates is appropriately calibrated at about half the usual increase of 0.30% we observed in each rate revision by banks this year.  DBS has increased by an average of only 0.15% (see table below) which is in keeping with the recent rise in the benchmark interest rate of 3-month SIBOR.  SIBOR has risen recently from its last trading level of 1.63% to the current 1.76% (see chart) and we are expecting it to rise further before the year is over with US Fed widely tipped to deliver on its 4^th and final rate hike for the year in this month’s FOMC on 18-19 December.

Here is a snapshot of the FHR tranches affected:

FHR Tranches	Old Value	New Value	Increase By	Effective Date
FHR (ave 12/24 mth)	0.975% 12M: 0.80% 24M: 1.15%	1.075% 12M: 0.95% 24M: 1.20%	0.10%	13 Dec 2018
FHR18	0.95%	1.10%	0.15%	13 Dec 2018
FHR9	0.80%	0.95%	0.15%	13 Dec 2018
FHR8	0.50%	0.675%	0.175%	13 Dec 2018

DBS, being the market leader, has always taken the lead in revising rates and we are expecting all the other lenders to follow suit very quickly.  Very probable, banks being privy to events in the interbank market, have already seen movements in rates in anticipation of the next tightening by the central bank. There are tell-tale signs as in recent weeks we have seen quite a number of banks raising their fixed home loan rates to levels not seen in Singapore in the last 10 years.  The prevailing 2-year fixed rate home loan rates has now hit 2.40%!

To give homeowners the right perspective on what we mean by broad market movements of late, here is a list of lenders who have moved up their fixed home loan rates in December:

As At 6-Dec-2018	Fixed Rate (Nov-2018)	Revised Fixed Rate (Dec-2018)
DBS	Year 1: 2.28% (fixed) Year 2: 2.28% (fixed) Year 1: 2.48% (fixed) Year 2: 2.48% (fixed) Year 3: 2.48% (fixed)	Year 1: 2.38% (fixed) Year 2: 2.38% (fixed) Year 1: 2.68% (fixed) Year 2: 2.68% (fixed) Year 3: 2.68% (fixed)
UOB	Year 1: 2.38% (fixed) Year 2: 2.38% (fixed) Year 1: 2.38% (fixed) Year 2: 2.38% (fixed) Year 3: 2.58% (fixed)	Year 1: 2.48% (fixed) Year 2: 2.48% (fixed) Year 1: 2.68% (fixed) Year 2: 2.68% (fixed) Year 3: 2.68% (fixed)
OCBC	Year 1: 2.38% (fixed) Year 2: 2.38% (fixed)	Year 1: 2.58% (fixed) Year 2: 2.58% (fixed)
HSBC	Year 1: 2.15% (fixed) Year 2: 2.15% (fixed) Year 1: 2.30% (fixed) Year 2: 2.30% (fixed) Year 3: 2.30% (fixed)	Year 1: 2.50% (fixed) Year 2: 2.50% (fixed) Year 1: 2.65% (fixed) Year 2: 2.65% (fixed) Year 3: 2.65% (fixed)
MAYBANK	Year 1: 2.28% (fixed) Year 2: 2.28% (fixed)	Year 1: 2.48% (fixed) Year 2: 2.48% (fixed)

There are only a handful of banks yet to adjust their fixed home loan rates and we are expecting them to do so soon, so there now lies a small window of opportunity for those seeking to refinance before the year is over (those with lock-in expiry by June 2019 should call us for an obligation-free chat). For those who act fast, we could still get you fixed rate at 2.10% over the next two years which translates into substantial savings as we expect the hikes to continue for little more and stabilized at the 2.50% level.

Being thought leader in the mortgage space, it is our responsibility to report on rate hikes by all lenders in the market place so that we can be trusted by homeowners in Singapore to always provide the most accurate and up-to-date information on mortgage rates and news. Work with our small team of very experienced mortgage consultants who have been diligently serving since 2014.

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.