Fixed rates for UOB, DBS and OCBC home loans top 4%, highest in nearly two decades, analysts say

SINGAPORE – Home loan rates rose above the 4% mark on Tuesday (November 15) after three major banks here increased their fixed rate packages, with United Overseas Bank (UOB) being the highest at 4.5% for a two-year loan.

That’s the highest in nearly two decades, analysts said.

UOB Group Personal Financial Services Manager Jacquelyn Tan said as global interest rates continue to rise, she will continue to monitor market conditions and regularly review home loan packages to ensure that they remain competitive.

DBS, Singapore’s largest bank, now offers a rate of 4.25% with terms of two to five years.

Meanwhile, OCBC offers one-year and two-year fixed rate plans at 4.3% per annum.

It came two weeks after HSBC raised fixed rates on its two- and three-year home loans to 4.25%.

This brings fixed mortgage rates above the 4% medium-term interest rate floor that the Monetary Authority of Singapore (MAS) has set to determine the amount of loan an individual can apply for.

This framework ensures that people continue to borrow or take out loans prudently when interest rates rise.

Maybank economist Chua Hak Bin said these were “the highest mortgage rates young Singaporeans will have seen in their lives” and will rise alongside further rate hikes in the United States. United.

The US Federal Reserve raised its benchmark lending rate by 0.75 percentage points, the sixth increase this year, in a bid to tackle high inflation.

Chua said lending rates are expected to top 5% early next year.

Based on the global inflation situation, CIMB economist Song Seng Wun predicts that rates “will rise and stay high for some time before falling,” adding that it could take about a month. year before seeing a significant decline.

In response to TODAY’s questions, DBS said that many customers continue to choose fixed rate plans, especially in anticipation of further rate hikes from the US Fed.

Therefore, DBS offers longer tenor loans of three to five years so that borrowers “seeking peace of mind” can lock in their fixed rates for a longer period.

OCBC head of home loans Maryanne Phua said the bank had reintroduced its fixed-rate offerings in response to popular demand, which it temporarily stopped offering at the end of October.

“This will allow consumers the choice and flexibility to opt for the mandate that best suits their personal plans,” she added.


DBS said it also continues to see growing interest among customers for its hybrid loans, which include both fixed and floating rates.

And noting that customers continue to turn to fixed rates for stability, it adjusted its hybrid loan to allow customers to allocate more of their home loan at fixed rates of up to 70%, compared to 50% previously.

“That way they will have more flexibility to take advantage of lower floating interest rates right now, while leveraging the stability of fixed rates to anchor any potential swings,” the bank said.

UOB currently offers hybrid loans with a lower all-in interest rate of 3.93% as long as borrowers take half their loan amount at a two-year fixed rate.

Chua said floating rates are suitable for those who can afford to take on more risk and uncertainty and that in the short term rates are historically lower than fixed rates.

“But we were in an environment where inflation was not an issue,” he added.

Fixed rates, on the other hand, are suitable for borrowers who dislike risk or uncertainty, as the monthly repayment is usually a fixed sum.

As a result, hybrid loan packages can be attractive to borrowers who don’t mind taking on a bit of risk while enjoying the benefits of certainty, analysts said.

DBS said that regardless of interest rate trends or the choice of home loan packages, it urges borrowers to set aside sufficient funds as a buffer in the event of further interest rate hikes or unforeseen circumstances.

“Ideally, one should set aside some cash or cash savings that can be used to pay their monthly mortgage payments for the next two years, in addition to at least six months of expenses,” the bank said.

“That would allow plenty of time to restructure the loan, or even sell the property if they run into financial trouble.”

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