S’pore Banks Increase Rates For All Home Loans, DBS’ Fixed Rate Package Highest For Now

DBS Increases Rates For All Home Loans Alongside Other Local Banks

To combat inflation, the Federal Reserves (Feds) raised interest rates earlier in March — the first time it had done so in more than three years. Since then, the US central bank has risen rates twice more in May and June.

Following suit, banks in Singapore such as DBS, UOB, and OCBC have also increased interest rates on their home loans.

In addition, DBS has removed its five-year HDB fixed-rate package. As a result, its rates are now the most expensive among all three banks.

DBS increases rates for all home loans

On Wednesday (29 Jun), The Straits Times (ST) reported that DBS has increased its rates for home loans.

The move follows similar rate hikes by UOB and OCBC, in response to the Feds’ rate hike earlier this month.

DBS’ fixed-rate packages now offer a rate of 2.75% per annum, the highest among the three banks.

The bank’s two-year fixed-rate package is also 0.3 percentage points higher at 2.75% per annum, with the three-year fixed package now 0.15 percentage points higher, also at 2.75 per cent per annum.

The previous fixed rate was 2.45%. This means homeowners now have to fork out more expensive instalments each month.

UOB and OCBC increased home loans rates last week

ST reported last Saturday (25 Jun) that both UOB and OCBC increased interest rates for their home loan packages.

The two-year fixed rate package by UOB has increased by 0.3% to 2.65%. OCBC also hiked its rates by 0.4% to 2.65% per annum for two-year fixed packages.

Home loans that were pegged to the Singapore Overnight Rate Average (Sora) were adjusted as well.

For DBS, its Sora floating rate package increased by 0.2%, now at a three-month compounded Sora alongside a margin of 1% per annum and a two-year lock-in.

For OCBC, its Sora package fell to a one-month compounded Sora and 0.98% per annum. As for UOB, its Sora floating package has remained at a three-month compounded Sora and 0.8% per annum.

Both OCBC’s and UOB’s packages have a two-year lock-in period.

Hybrid home loan package might be more affordable

Speaking to ST, a DBS Consumer Banking Group spokesperson said that the “blended rate of a hybrid home loan package is typically lower than a fixed-rate package”.

The bank’s two-in-one home loan package allows borrowers to apply for 50% of their loan amounts under a fixed rate package and the rest under a floating rate package with special rates.

Those who apply for this package can also opt for 40% fixed and 60% floating or 30% fixed and 70% floating.

UOB is another bank which offers a similar hybrid home loan package, allowing borrowers the option of combining fixed-rate and three-month compounded Sora packages.

Hope inflationary situation eases soon

Given the inflationary landscape worldwide, the rate hikes worldwide and in Singapore are perhaps expected and inevitable.

We hope home seekers will consider their home loan packages carefully before committing themselves to the policies.

Hopefully, the inflationary situation will abate soon so allowing for the banks to lower customers’ cost of borrowing.

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Featured image adapted from DBS and by MS News.