More Singapore banks offering 3-year fixed-rate mortgages

Four banks are now offering this type of mortgage following the recent drop in interest rates.

In a bid to take advantage of Singapore’s recovering property market, four lenders here are now offering three-year fixed-rate home loans, reported the Business Times.

Last week, HSBC and United Overseas Bank (UOB) started offering this type of mortgage following the recent drop in interest rates.

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In fact, the three-month Singapore interbank offered rate (SIBOR), which is a benchmark used for pricing mortgages here, has declined from a year high of 1.13717 percent in July to 1.12283 percent at present.

As a result, HSBC and UOB have entered a market segment that has been occupied by DBS Bank and Bank of China (BOC). The two new players and DBS Bank each offer three-year housing loans with a fixed interest rate of 1.68 percent per annum, while that from BOC comes with a rate of 1.48 percent, 1.58 percent and 1.68 percent for the first, second and third year respectively.

On the other hand, OCBC Bank has not yet joined the fray, but it is offering a two-year housing loan with a fixed rate of 2.38 percent per annum.

“When it comes to fixed rates, most lenders will have a two-year fixed-rate package, but in recent years, only less than a handful would dangle a low fixed-rate term of three years due to the higher costs involved in hedging interest rates for a longer period with an improving global outlook,” said MortgageWise.sg executive director Darren Goh.

“For homeowners, with more lenders joining the fray to offer competitive fixed rates, it keeps the incumbents in check which leads to more choices and lower interest for everyone.”

However, he believes that the latest fixed-rate mortgage war could end if the US Federal Reserve decides to reduce its US$4.5 trillion bonds in a scheduled meeting this month.

“We think that is when the market will start to see some real upward pressure on the dollar and 10-year yields, with interest rates going north within three to six months of such bond sale actions.”

“Homeowners should make use of this window of opportunity now to lock down fixed rates especially for the longer fixed term,” Goh noted.

 

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg