DBS just announced on its website broad-based increase on its FHRs across all tranches with the latest increase in fixed deposit rates with effect from 7 December 2022 (contact us for detailed tracking of FHR history since 2014):

Source: As announced by DBS on its website

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FHR stands for Fixed Deposit Home Rate where the bank pegs mortgage rates to its published sing dollar fixed deposit rates across different tenors for amounts $1,000 to $9,999.  FHR is not a fixed home loan rate but gets adjusted whenever the bank revises its fixed deposit rates.  Since 2014, DBS had introduced various tranches of home loans from FHR (ave of 12/24), FHR18, FHR9, FHR8, FHR24 to its most recent FHR6.

DBS home loan customers will be receiving letters from the bank in January 2023 where the new rate and revised monthly repayment will kick in from March 2023. See the bank’s detailed announcement on its website.

This hike comes as no surprise to us as we had anticipated it back in September during the last increase on 13 Sep.  This is the third hike on FHR this year. Let’s just say this will not be the last round going into 2023 as U.S. Fed is not quite done yet with another 1% increase priced in by the market before they pause.

Perhaps what’s a little surprising is the amount of increase this time with an average jump of 1.50% across the board for all FHR tranches.  However, put in perspective, the bank is merely playing catchup with interest rate trends for the whole of 2022 across the globe.  In fact, it has chosen to level up with the market (those paying SORA-pegged floating rates) only at the end of the year.  The lag in raising interest rates to that of the market is about 6 months and is consistent with what we know about the nature of FHR and what makes it a good mortgage peg in times of rising interest rates.

As with all things in life there are two sides.  The flip side is homeowners who were on FHR-pegged home loans will now be caught between a rock and a hard place when fixed rates had already escalated to levels not seen in Singapore in the last 15 years!  There will still be options but limited for those who pondering between fixed and floating rates.  Speak to us to get an expert view on the interest rate cycle and our forecast.  There may still be a way to “win back” in 2023/2024.

With the latest hike, those on FHR home loans will find themselves paying close to or above 4% mortgage rate in 2023, matching those on SORA home loans.  Understand that this hike is not just on DBS FHR home loan customers.  We are expecting similar moves on UOB home loans, OCBC home loans, etc. In fact, on all BOARD-based mortgage pegs which will go up quite significantly in one fell swoop.  The Singapore banks had largely been holding back big jump in mortgage BOARD rates and deferring them until the end of the year which means these homeowners had been enjoying lower-than-market floating rates in 2022 compared to those on SIBOR/SORA home loans.  But with rising deposit rates and cost of funds, there’s a limit to how long more banks can artificially keep BOARD rate increases down.

As we come close to the end of 2022 – a year of two halves, consider working with a professional mortgage broker who tracks the interest rate cycle and benefit from our insights and analysis in 2023 and beyond.

Understand that this hike is not just on DBS FHR home loan customers.  We are expecting similar moves from UOB, OCBC, etc. on all BOARD-based mortgage pegs which will go up quite significantly in one fell swoop. 

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