SINGAPORE: Local lenders DBS, UOB and OCBC on Tuesday (Oct 4) raised their fixed rate home loans, with rates reaching as high as 3.85 per cent.
DBS, Singapore’s largest lender, made the first move. A check of its website on Tuesday morning showed four fixed rate packages available, ranging from two to five years. All four are set at 3.5 per cent per annum.
DBS had previously removed all fixed rate mortgages from its website, as it conducted a review following another steep interest rate hike by the US Federal Reserve last month.
The same fixed rate of 3.5 per cent also applies to its two-in-one home loans, which allows borrowers to structure up to half of their loan amount in fixed rates and the remainder under a floating rate package.
DBS last adjusted its home loan rates in end-June. Then, it raised the rates on its two-year and three-year fixed rate packages to 2.75 per cent per annum, while scrapping a five-year fixed-rate package for Housing Board flat buyers.
The bank also introduced a new home loan package last week, allowing new and existing owners of HDB flats earning less than S$2,500 a month to take up a mortgage with POSB at 2.6 per cent per annum. This rate is similar to that of a HDB housing loan.
“We are cognisant that home loans are one of the largest and longest financial commitments that greatly impact a customer’s cashflow. So we are doing more to help our customers to not just own their homes, but also capitalise on opportunities to accumulate cash while they save,” said a DBS spokesperson.
The bank’s latest review is “in accordance with the interest rate environment” and its longer-tenure packages will benefit those looking to lock in a fixed interest rate for a longer period.
“The bank will continually explore ways to provide our customers more stability through our fixed rates packages programme,” the spokesperson added.
UOB, which was doing a similar review and had temporarily ceased its fixed rate offerings on Sep 23, told CNA on Tuesday afternoon that its two-year and three-year fixed rate home loan packages now bear per-annum interest rates of 3.75 per cent and 3.85 per cent, respectively.
This is up from 2.98 per cent and 3.08 per cent previously.
UOB also offers home loans that combine both fixed and floating rate packages. The all-in or blended rate of such a hybrid loan “tend(s) to be lower”, said its head of group personal financial services 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 per cent, and the other half on a floating rate package pegged to the three-month compounded SORA at an assumption of 2.09 per cent, the all-in rate will turn out to be 3.27 per cent, she said.
Such a hybrid loan package typically offers a fixed monthly repayment amount for a set period, while also allowing partial loan repayment for the floating rate portion without penalty.
“This means that when interest rates rise, customers can consider paying down the floating rate portion of their loan to avoid the incremental interest payments, while their fixed rate portion is protected against rising rates,” she added.
“We are continuously monitoring market conditions and will review our home loan packages to ensure they remain competitive,” Ms Tan told CNA in an emailed response.
In line with its peers, OCBC announced later in the day that it would be adjusting its two-year fixed rate package to a rate of 3.5 per cent, up from 2.98 per cent.
It is also re-introducing a one-year fixed rate mortgage of 3.35 per cent, citing demand for a shorter lock-in period among some customers.
“Some of these are customers who plan to sell their properties in the near future, while there are others who believe that interest rates may start to come off from end of next year,” said the bank’s head of consumer secured lending Phang Lah Hwa.
“Given this trend in the market, we have decided to re-launch our one-year fixed-rate package, together with our two-year fixed-rate package, albeit at a higher rate due to the current interest environment.
“Our pricing packages strike the balance between offering customers stability and yet giving them wriggle room to sell their property or review their home loan when the opportunity or need arises,” she added.