DBS and UOB raise fixed rate home loans to 3.5% and beyond
SINGAPORE: Local lenders DBS and UOB increased their fixed-rate home loans to 3.5% and beyond on Tuesday (October 4).
A check on the DBS website on Tuesday morning showed four fixed-rate packages available, ranging from two to five years. All four are set at 3.5 percent per year.
DBS, Singapore’s biggest lender, previously removed all fixed-rate mortgages from its website as it conducted a review following another sharp interest rate hike by the Federal Reserve. American last month.
The same 3.5% fixed rate also applies to its two-in-one home loans, allowing borrowers to structure up to half of their loan amount at a fixed rate and the rest at a variable rate.
DBS last adjusted its home loan rates at the end of June. Then it raised rates on its two- and three-year fixed-rate packages to 2.75% per annum, while scrapping a five-year fixed-rate package for buyers of Housing Board apartments.
The bank also introduced a new home loan scheme last week, allowing new and existing owners of HDB apartments earning less than S$2,500 to take out a mortgage with POSB at 2.6% per annum. This rate is similar to that of an HDB mortgage.
For now, it has kept its variable-rate mortgages unchanged, which are pegged to either the benchmark Singapore Overnight Average Rate (SORA) or the bank’s six-month average fixed deposit rate.
UOB, which was conducting a similar review and temporarily halted fixed-rate offerings on Sept. 23, told CNA on Tuesday afternoon that its two- and three-year fixed-rate home loan programs now carry lower rates. annual interest of 3.75%. and 3.85%, respectively.
This represents an increase from 2.98% and 3.08% previously.
UOB also offers home loans that combine fixed and variable rate formulas. The overall or blended rate of such a hybrid loan “tends to be lower,” said its group personal financial services manager, Jacquelyn Tan.
For example, if borrowers take half of their loan amount on a two-year fixed rate package at the current rate of 3.75%, and the other half on a SORA-indexed variable rate package consisting of three months at an assumption of 2.09 percent, the overall rate will turn out to be 3.27 percent, she said.
Such a hybrid loan package typically offers a fixed monthly repayment amount for a set period, while also allowing partial repayment of the loan for the variable-rate portion without penalty, Ms. Tan added.
“This means that when interest rates rise, customers can consider paying off the variable rate portion of their loan to avoid additional interest payments, while their fixed rate portion is protected against rising rates. “
UOB’s variable rate package is indexed to three-month compound SORA plus a margin of 0.7% per annum for the first two years and 0.8% from the third year onwards.
The three-month compound SORA – a key benchmark used by banks here to price floating home loans – rose from 0.1949 at the start of the year to 2.0851 on October 3.
“We are constantly monitoring market conditions and will review our home loan packages to ensure they remain competitive,” Ms. Tan told CNA in an email response.
OCBC has yet to make an announcement.
The bank had said on September 23 that it would continue to offer a two-year fixed rate package at 2.98%. But that offer has been removed from its website since the beginning of last week.