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OCBC’s New OHR. How does it defer from Fixed Deposit-Linked Rates?

OCBC’s New OHR. How does it defer from Fixed Deposit-Linked Rates?

Announced recently, OCBC has discontinued its current fixed deposit-linked home loan rate ‘the OCBC FDMR’ and introduced a new OCBC Home Rate (OHR)

How does the OHR fare? Should you consider it the new OHR when getting a home loan or refinancing your existing one? We definitely think so!

Here’s why:

What exactly is OHR?

Firstly, OHR stands for OCBC Home Rate. OHR is not based nor pegged to SIBOR, rather it was at the initial start of what the OHR base rate to begin with, and SIBOR trends was taken into account to determine the rate at 1%.

What are the 2 kinds of OHR Home Loans Packages that OCBC is offering?

 For starters, you have a choice of 2 different kinds of interest rates:

  1. A Fixed rate, which provides the stability of a fixed rate
  2. A Floating rate, a lower rate that is subject to change.

Additional perks included in OCBC Home Rate Package

  1. Allows partial prepayment of the loan without any additional fees during the loan in a period of 2 years for completed properties.

This means that should you wish to take advantage of the low OCBC Home Rate and have the flexibility to pay off part of your home loan up to 50% without incurring any additional prepayment fee during the 2 years lock-in period.

   2. One free interest rate conversion if the OHR increases

What does this means? This means that in the scenario that OHR increases anytime (even by 0.001%), you may negotiate another new interest rate package be it a fixed or floating rate with no additional charges or fees. The benefit of this is that it actually pressures OCBC to avoid any sudden increment of their OHR rate which will potentially cause a large number of existing customers to use this free conversion to their advantage.

How stable will OHR be?

Based on the trends over the past 12 years of 1-month and 3-months, SIBOR is at 1.0728% and 1.11990 respectively (at the time of publish), as compared to OHR base rate at 1%.

This means that the OHR is more stable as compared to SIBOR packages, as there is lesser volatility. (SIBOR rate went up to considerably high before 2000 - approx 2.5% in 2007 and 3.5% in 2008).  OHR offers both the stability of FDR and the transparency of SIBOR. Please note that OHR is a board rate, and the bank reserves the right to change the interest rates at its discretion.

What is the difference between OHR and Fixed Deposit-Link Interest Rates?

Well, both interest rates are still technically board rates, but there are differences between them. Fixed Deposit-Link interest rates are pegged to fixed deposit that pays out to consumer that places funds within the bank, this is an internal board rate that is decided by the bank and there are different kind of Fixed Deposit-Link interest rates that are pegged to different tenures (E.g. 9 / 36 / 48 months), while OHR is a new board rate introduced to keep up with competitive times, as well as to cater to a different group of customers.

Should you consider OHR?

Our take on OHR is definitely positive and yes you should consider OHR. OCBC being one of the biggest three banks in Singapore has launched an innovation of interest rate to stay competitive in the mortgage market. Speak to our Mortgage Gurus today! They are excited to share and analyse the options with you!

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