Local banks raise home loan rates

This article is more than 12 months old

Fixed-rate loans rise 10% in 2 months to 1.85%, as experts warn of further hikes

All three local banks have raised their home loan rates as interest rates continue to spike, and mortgage advisers warn of more hikes to come.

DBS Bank, OCBC Bank and United Overseas Bank, which collectively account for the lion's share of the housing loan market, have raised the interest on their fixed-rate and floating-rate packages since last month.

DBS and UOB have jacked up the interest on their three-year fixed-rate loans by 10 per cent. The fixed-rate packages now sell for 1.85 per cent a year for each of the three years.

In October, the rate was 1.68 per cent.

A DBS spokesman said that it had raised rates "in tandem with market interest rate environment and outlook". Demand for the revised 1.85 per cent three-year fixed-rate loan remains strong, he added.

Most popular is DBS' floating-rate loan, which is pegged to its fixed deposit home loan rate (FHR) and accounts for nine out of 10 loans sold, he said.

The DBS floating-rate package charges 1.65 per cent a year. This is made up of a 1.45 per cent spread plus the FHR, currently at 0.2 per cent.

OCBC, which launched a two-year fixed-rate loan package in October, has increased the interest to 1.75 per cent a year for each of the two years, up from 1.65 per cent.

The first-year rate for its floating-rate loan is now 1.6 per cent, a jump from 1.3 per cent.

Ms Koh Ching Ching, group head of the bank's corporate communications, said: "The revision of our home loan rates is in line with market conditions."

The home loan benchmark, the three-month Sibor, or Singapore interbank offered rate, is up sharply. It was 1.21 per cent last Friday, up eight points from the previous Friday. The benchmark had been rising for five straight days.

UOB expects the three-month Sibor to hit 1.4 per cent by year end, in response to tight liquidity conditions due to seasonal factors plus the likelihood of a third rate hike by the US Federal Reserve this year.

Mr Darren Goh, executive director of mortgage broker, has been urging home buyers in recent weeks to secure their rates for refinancing or new purchases. The advice was extended to clients whose renewals may come up only early next year.

In a Nov 30 posting on his blog, Mr Goh said: "The banks have been slowly and quietly moving up their rates for both fixed- and floating-rate packages since the start of November, hence do take action quickly to lock down good rates for refinancing, or even purchase."

For those looking at fixed-rate packages, HSBC and Bank of China do not seem to have moved their home loan rates yet. Their three-year fixed-rate home loans have stayed unchanged at 1.68 per cent as of Nov 27 - according to the latest available figures from the MortgageWise website. - THE STRAITS TIMES