DBS, OCBC, UOB raise interest rates for fixed home loans to up to 4.5%

SINGAPORE: DBS, OCBC and UOB raised their fixed home loan interest rates on Tuesday (Nov 15), with rates reaching up to 4.5 per cent.

DBS, Singapore’s largest lender, has four fixed rate packages available, ranging from two years to five years. All four are set at 4.25 per cent per year.

OCBC one-year and two-year fixed rate packages are now set at 4.3 per cent per year, up from 3.35 per cent and 3.5 per cent respectively.

UOB's two-year fixed rate package is now set at 4.5 per cent per year. 

Earlier this month, the US Federal Reserve raised the benchmark lending rate by 0.75 percentage point - the fourth straight increase of that size and the sixth hike this year - in a battle to tame high inflation.

Singapore’s core inflation rose to 5.3 per cent in September, edging towards a 14-year high. The three local banks last adjusted their home loan rates in October.

FLOATING RATES

DBS’ floating rates remained the same at a three-month compounded Singapore Overnight Rate Average (SORA) and a lending margin of 1 per cent per year.

The three-month compounded SORA has risen from 0.1949 at the start of the year to 2.6633 as of Nov 14. There is a two-year lock-in period.

The bank also changed its "hybrid loan". People can now structure up to 70 per cent of their home loan amount in fixed rate, and the remaining in a floating rate package. It was previously up to 50 per cent.

The floating rate from the hybrid loan is the three-month compounded SORA with a lending margin of 0.75 per cent, with a two-year lock-in period.

OCBC’s floating interest rates remain unchanged, with a rate of three-month compounded SORA and 0.98 per cent lending margin for the first and second year, before the lending margin rises to 1 per cent in the third year.

The floating packages will be “more attractive” for customers who want flexibility in their prepayment, said OCBC’s head of home loans Maryanne Phua.

A DBS spokesperson said: “Regardless of interest rate trends or choice of home loan packages, we strongly advise borrowers to set aside sufficient funds as a buffer in case of further interest rate hikes or any unforeseen circumstances.

“Ideally, one should set aside some savings in cash or liquid assets that can be used to pay for their monthly home loan instalments for the next two years, in addition to at least six months’ worth of expenses.

“This would allow sufficient time to restructure the loan, or even sell the property should they run into any financial issues.” 

UOB's floating interest rates also remain unchanged, with a floating rate pegged to the three-month compounded SORA, plus a margin of 0.7 per cent per annum for the first two years, and 0.8 per cent from the third year.

On the bank's fixed and floating rate home loan packages, UOB's head of group personal financial services, Jacquelyn Tan, said: "Buying a property is a long-term commitment and a significant milestone. We want to support and provide our customers with a range of options to meet their unique needs and circumstances."

Housing and Development Board (HDB) resale prices in Singapore have risen for 10 consecutive quarters, while private home prices were also up by 3.8% in the third quarter of this year.

The Government introduced several cooling measures on Sep 30, including tightening the maximum loan quantum limits. For HDB loans, the loan-to-value (LTV) was lowered to 80 per cent from 85 per cent.

A 15-month wait-out period was also implemented for private home owners buying HDB resale flats, although this will not apply to seniors aged 55 and above who are moving from their private property to a four-room or smaller resale flat.