Economic activity

DBS, UOB and OCBC increase fixed rate home loans to 3.85%

SINGAPORE: Local lenders DBS, UOB and OCBC increased their fixed-rate home loans on Tuesday (October 4th), with rates reaching 3.85%.

DBS, Singapore’s largest lender, has taken the first step. 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 percent per year.

DBS previously removed all fixed-rate mortgages from its website as it conducted a review following another sharp interest rate hike by the US Federal Reserve 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.

“We recognize that home loans are one of the largest and longest financial commitments that have a significant impact on a client’s cash flow. So we’re doing more to help our customers not only own their homes, but also take advantage of opportunities to accumulate money while saving,” a DBS spokesperson said.

The bank’s latest review is “in line with the interest rate environment” and its longer-term offerings will be benefit those looking to lock in a fixed interest rate for a longer period.

The bank will continuously explore ways to provide our customers with more stability through our fixed rate package program,added the spokesperson.

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.

“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.” , she added.

“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.

In line with its peers, OCBC announced later in the day that it would adjust its two-year fixed rate plan to a rate of 3.5% from 2.98%.

It is also reintroducing a one-year fixed rate mortgage of 3.35%, citing demand for a shorter lock-in period among some customers.

“Some of them are clients who are planning to sell their properties in the near future, while others think interest rates may start to come down from the end of next year,” he said. the bank’s head of consumer secured loans, Phang Lah Hwa.

“Given this market trend, we have decided to relaunch our one-year fixed rate package, as well as our two-year fixed rate package, but at a higher rate due to the current interest rate environment. ‘interest.

“Our pricing packages strike a balance between providing clients with stability and giving them leeway to sell their property or revisit their home loan when the opportunity or need arises,” she added.