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OCBC launches new competitive fixed-rate home loan

OCBC launches new competitive fixed-rate home loan

Home owners in Singapore will have more options, as OCBC has recently just introduced a new fixed rate for your home loan.


The new two-year fixed rate home loan is based on a new benchmark, called the OCBC Home Rate (OHR). The OHR Benchmark is the long-term average of the one-month and three-month SIBOR, also known as Singapore Interbank Offered Rate.


While the new two-year fixed rate package is not the lowest in the market at the moment, it is much cheaper than their previous two-year fixed rate package, at 2.38% per annum.


Some home owners who believe interest rates will continue to rise, are said to be looking for a three-year lock in period, which OCBC does not have at the moment.


Whether banks offer two or three-year fixed rates depends on their respective funding costs.


Said a OCBC spokeswoman, the latest OCBC home loan package, includes several features, such as:


  • A one-time free conversion after the two-year fixed rate lock-in period ends.
  • It also allows partial pre-payment. Up to 50 percent of the original loan amount. (which other banks usually charge an admin fee for partial pre-payment within the lock-in period)
  • Full pre-payment penalties, will be reduced by 50% (from 1.5% to 0.75%), if property is being sold during the prepayment period. (which other banks usually charge 1.25% to 1.5% for such cases of full pre-payment during the lock in period)


In a statement by Koh Ching Chong, OCBC head of group corporate communications, about the OHR package: “it appeals to customers who like the transparency of the Sibor benchmark, the ability to pre-pay, and the free one-time conversion in the event of a rate increase. These features are not found in other fixed rate home loans,"


DBS bank, Singapore’s largest housing loan provider has usually been the bank that offers three-year fixed rate home loan packages. However last month, both HSBC and UOB banks also launched similar three-year fixed rate home loans. Bank of China (BOC) also has a relatively competitive three-year fixed rate package like the rest.


In anticipation of more interest rates hikes by the US Federal Reserve, as well as a buoyant residential market in Singapore, both UOB and HSBC’s three-year fixed rate packages are both at 1.68% for each of the three years has been popular with Singaporeans since their launch.


As said by a DBS spokeswoman, the bank continues to see strong demand for mortgage loans.


Said a UOB spokeswoman, “Given that home ownership is a long-term commitment, we encourage our customers to understand the full costs and terms of their home loans, and how interest rate changes may impact their monthly repayments, when choosing a home loan package”


Home loans, which are priced after the three month Sibor, has dropped and have been around the range of 1.12383 per cent, from a year high of 1.13737 per cent which peaked in July. However, at 1.12383 percent, it is still much higher than the 52-week low of 0.87042 per cent, on Oct 7, 2016.


In the second quarter of this year, the number of private homes sold in both primary and secondary markets was at 6905. Which is the highest quarterly sales number since the second quarter of 2013, at 6945, before the total debt servicing ratio framework was introduced in late June 2013.


In Q2 2017, the 6905 private homes sold showed a 32.7 per cent increase quarter on quarter, and 51.8 per cent year on year. The number of transactions both in primary and secondary markets in the first half of 2017 was 12,107 units, up from 64.7 per cent from the first half of 2016.


Speak to our Mortgage Gurus today! They are excited to share and analyse various interest rate options with you! 


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