3M SIBOR VS FDR HOME LOAN
1. FDR Tracking By MortgageWise
FDR (Fixed Deposit Rate) home loans is a new category of mortgage peg for home loans in Singapore first introduced by DBS back in 2014. Since then other banks have also launched their respective FDRs as follows (we track only these initial tranche FDR from each bank):
DBS FHR18 (Black line) – launched Jun 2014 at 0.40 (formerly as FHR ave of 12M & 24M FD rate)
OCBC 36FDMR (Red line) – launched Oct 2015 at 0.65
UOB 36FDPR (Blue line) – launched Apr 2016 at 0.65
SCB 48FDR (Green line) – launched May 2016 at 0.50
MAYBANK FDMR36 (Yellow line) – launched Feb 2017 at 1.20
HSBC TDMR24 (Brown line) – launched Dec 2017 at 0.65
At MortgageWise we follow any movements in FDRs closely and remain the only mortgage consultancy firm that offers this tracking mechanism from the inception of the respective FDRs.
As it will be impossible to put all various FD tranches from all banks (some banks may have up to 4-5 tranches from one single bank) on one graph which will render it useless, speak to our consultants today if you like to see the tracking of FDR tranches from a specific bank.
2. FDR Is Less Volatile
FDR is generally less volatile than SIBOR (narrower swings from peak to trough)
3. FDR Is Preferred Over SIBOR when interest cycle is on uptrend
In periods of rising interest rate, FDR is preferred as it lags behind SIBOR and does not go up as much as SIBOR. The converse happens when interest rate is on its way down and SIBOR would be a better choice.
This is because when interest comes down, SIBOR would always be the first to roll off. Banks will tend to be much slower to adjust down as they earn more on loan net interest margin than the cost of fund they pay for pre-selected FDR tranches.