Following after DBS, last week OCBC announced hikes across its entire mortgage loan books (exclude 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.
Compare All Latest Rates 2018
The average increases this time is higher than what we would usually expect but we noted that in the last round of increases by OCBC in September, only certain tranches of home loans were affected. Also, we know from our own sources that some segments of OCBC mortgage clientele have got their mortgage rate intact in September as the bank simply moved them to a new BOARD rate but kept the final interest rate unchanged. What this means is that the bank is delaying the imminent hike and its impact on its clients until it is no longer able to do so with two more rate hikes from US Fed since.
Here’s a snapshot of the tranches affected:
|Old Value||New Value||Increase By||Effective Date|
|15FDMR||0.55%||1.25%||0.70%||16 Jan 2019|
|36FDMR||0.95%||1.55%||0.60%||16 Jan 2019|
|48FDMR||1.25%||1.75%||0.50%||16 Jan 2019|
|OHR||1.30%||1.80-2.00%||0.50-0.70%||16 Jan 2019|
|MBR (Mortgage Board Rate)||0.80%||1.20-1.30%||0.40-0.50%||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 (like OHR and MBR above) which are internal lending rates not published anywhere on the bank’s website. Also, the bank can decide to increase by varying amount for the same BOARD rate (eg. OHR where the increases are in the range of 0.50-0.70%) depending on which periods the loans are signed and hence it is almost impossible for any third party to be able to track these increases after a while.
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).
Compare All Latest Rates 2018
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.