Which Bank Offers The Lowest HDB Housing Loan Interest Rate?
Choose what type of property and the kind of interest rate you are looking at. There are two general types :
Floating or variable rate housing loan is where the interest rate is pegged to a certain market indicator for typically 3-month sibor (Singapore Interbank Offer Rate) which is the money market rates that banks lend to one another in Singapore. This usually tracks the movement of interest rates in US. The bank adds a profit margin called a spread above sibor. The peg could also take the form of the bank’s internal board rate for housing loan minus a spread or a discount. More recently in 2014 DBS introduced a new peg that is tied to its fixed deposit rates which is gaining popularity.
Fixed rate housing loan is one where the interest rate is fixed for a certain no of years at the start (usually 2 or 3 years) before it gets reverted to the usual floating rate as described above. The fixed rate for the initial years is usually higher than the prevailing floating rates but it gives a peace of mind to customers who wants a fixed monthly instalment in the midst of a rising interest rate environment.
Note that usually the same package is offered from the bank be it for new purchase or refinancing just that legal subsidy is not provided for new purchases and only selected banks offer it for refinancing. Get a free copy of our Loan Comparison Report for all the finer details!
SELECT THE TYPE OF HOUSING LOAN YOU NEED :
To understand more on what else to look out for in a home loan, go to our Home page.