This marks the second hike in fixed home loan interest rates in under two months.
SINGAPORE: DBS, OCBC, and UOB have raised their fixed home loan interest rates as of Tuesday (Nov 15), with rates reaching as high as 4.5%. DBS, Singapore’s largest bank, now offers four fixed-rate packages ranging from two to five years, all set at 4.25% per year.
OCBC has adjusted its one-year and two-year fixed-rate packages to 4.3% per year, up from previous rates of 3.35% and 3.5%, respectively. Meanwhile, UOB’s two-year fixed-rate package is now priced at 4.5% per year.
These increases follow the US Federal Reserve’s recent decision to raise its benchmark lending rate by 0.75 percentage points—marking the fourth consecutive hike of that magnitude and the sixth increase this year—as part of ongoing efforts to curb high inflation. Singapore’s core inflation rate climbed to 5.3% in September, nearing a 14-year peak. Notably, the three local banks last adjusted their home loan rates in October.
Floating Rates
DBS’s floating rates remain unchanged, pegged to the three-month compounded Singapore Overnight Rate Average (SORA) plus a lending margin of 1% per year. The three-month compounded SORA has surged from 0.1949 at the start of the year to 2.6633 as of Nov 14. There is a two-year lock-in period for these rates.
Additionally, DBS has modified its “hybrid loan” structure, allowing borrowers to designate up to 70% of their home loan amount as fixed rate, with the remainder in a floating rate package, an increase from the previous 50%.
OCBC’s floating interest rates also remain stable, based on the three-month compounded SORA and a lending margin of 0.98% for the first and second years, rising to 1% in the third year. OCBC’s head of home loans, Maryanne Phua, noted that the floating packages would appeal to customers seeking flexibility in their prepayment options.
A DBS spokesperson advised borrowers to set aside adequate funds as a buffer against potential further interest rate hikes or unexpected financial challenges. Ideally, borrowers should have sufficient savings to cover monthly home loan payments for at least the next two years, along with at least six months’ worth of living expenses. This precaution would provide enough time to restructure the loan or consider selling the property if necessary.
UOB’s floating interest rates remain consistent, pegged to the three-month compounded SORA with a margin of 0.7% per annum for the first two years, increasing to 0.8% from the third year onward. Jacquelyn Tan, head of group personal financial services at UOB, emphasized the significance of property purchases and the need to support customers with diverse options tailored to their circumstances.
In the broader housing market, HDB resale prices in Singapore have risen for 10 consecutive quarters, while private home prices increased by 3.8% in the third quarter of this year. In response, the Government implemented various cooling measures on September 30, including tighter maximum loan quantum limits. The loan-to-value (LTV) ratio for HDB loans has been lowered from 85% to 80%, and a 15-month wait-out period has been introduced for private homeowners purchasing HDB resale flats. However, this measure does not apply to seniors aged 55 and above transitioning from private property to a four-room or smaller resale flat.
