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PR Newswire
01-04-2013, 07:50 AM
The Straits Times
www.straitstimes.com
Published on Apr 01, 2013
DBS targets HDB flat buyers with new home loan
By Magdalen Ng
DBS Bank has launched a new home loan targeted at the HDB home buyer, with interest rates that are more attractive than that of the concessionary loan offered by the Housing Board.
The POSB HDB Loan will have its interest rate capped at the Central Provident Fund's (CPF) Ordinary Account rate, which is 2.5 per cent, for 10 years. The loan also has no pre-payment charges.
For the first 10 years, the interest rate will be the three- month Singapore Interbank Offered Rate (Sibor) plus 1.38 per cent. Thereafter, it will be the three-month Sibor plus 1.48 per cent. In the recent months, the three-month Sibor has been hovering at the 0.35 per cent mark.
At current interest rates, the monthly repayment for a 30-year loan of $320,000 under the POSB HDB Loan will be more than $100 less than that of the HDB concessionary loan.
The HDB concessionary loan is pegged at 0.1 percentage point above the CPF's Ordinary Account rate, which works out to 2.6 per cent currently.
Last year, two-thirds of the 59,000 HDB home buyers took the HDB loan.
DBS head of deposits and secured lending Lui Su Kian said that the POSB HDB Loan was designed after the bank realised that customers would rather pay a fixed, but higher rate.
She said: "There is a certain level of inertia once a home buyer settles on the loan. It is important for HDB home buyers to consider loan options outside of the HDB concessionary loan during their purchase process."
This loan is available only to HDB owners who are looking to refinance, buyers of resale flats, or those whose Build-To-Order (BTO) flats are close to completion.
Ms Lui explained that because there is a three- to five-year gap between the purchase and the completion of a new BTO flat, the bank may be vulnerable to interest rate risks, given that the interest rate cap is guaranteed for 10 years.
For those refinancing their loans, DBS is also offering a $1,800 cash rebate for loans of at least $100,000 to defray legal fees.
One downside of choosing a private bank loan is that HDB home buyers will have to fork out an initial 5 per cent cash payment, which is not necessary compared with an HDB loan, where it can be paid using CPF monies.
Ms Lui also noted that while there have been some cases of repossession, these are rare.
She encouraged bank customers to discuss options with the bank should their financial situation change. "We are here for the long term, and we want to help our customers. If our customers come to us, we can work out a six-month or 12-month plan to help them through difficult times," she said.
Newly married civil servant Anne Chia, 30, said that the new offering does sound like a good deal, but she will probably have to wait till her flat in Sengkang is ready in 2015 before making a decision.
"Being able to enjoy cheaper repayments for 10 years is quite enticing. The money saved can be used on other expenses," she said.
songyuan@sph.com.sg
www.straitstimes.com
Published on Apr 01, 2013
DBS targets HDB flat buyers with new home loan
By Magdalen Ng
DBS Bank has launched a new home loan targeted at the HDB home buyer, with interest rates that are more attractive than that of the concessionary loan offered by the Housing Board.
The POSB HDB Loan will have its interest rate capped at the Central Provident Fund's (CPF) Ordinary Account rate, which is 2.5 per cent, for 10 years. The loan also has no pre-payment charges.
For the first 10 years, the interest rate will be the three- month Singapore Interbank Offered Rate (Sibor) plus 1.38 per cent. Thereafter, it will be the three-month Sibor plus 1.48 per cent. In the recent months, the three-month Sibor has been hovering at the 0.35 per cent mark.
At current interest rates, the monthly repayment for a 30-year loan of $320,000 under the POSB HDB Loan will be more than $100 less than that of the HDB concessionary loan.
The HDB concessionary loan is pegged at 0.1 percentage point above the CPF's Ordinary Account rate, which works out to 2.6 per cent currently.
Last year, two-thirds of the 59,000 HDB home buyers took the HDB loan.
DBS head of deposits and secured lending Lui Su Kian said that the POSB HDB Loan was designed after the bank realised that customers would rather pay a fixed, but higher rate.
She said: "There is a certain level of inertia once a home buyer settles on the loan. It is important for HDB home buyers to consider loan options outside of the HDB concessionary loan during their purchase process."
This loan is available only to HDB owners who are looking to refinance, buyers of resale flats, or those whose Build-To-Order (BTO) flats are close to completion.
Ms Lui explained that because there is a three- to five-year gap between the purchase and the completion of a new BTO flat, the bank may be vulnerable to interest rate risks, given that the interest rate cap is guaranteed for 10 years.
For those refinancing their loans, DBS is also offering a $1,800 cash rebate for loans of at least $100,000 to defray legal fees.
One downside of choosing a private bank loan is that HDB home buyers will have to fork out an initial 5 per cent cash payment, which is not necessary compared with an HDB loan, where it can be paid using CPF monies.
Ms Lui also noted that while there have been some cases of repossession, these are rare.
She encouraged bank customers to discuss options with the bank should their financial situation change. "We are here for the long term, and we want to help our customers. If our customers come to us, we can work out a six-month or 12-month plan to help them through difficult times," she said.
Newly married civil servant Anne Chia, 30, said that the new offering does sound like a good deal, but she will probably have to wait till her flat in Sengkang is ready in 2015 before making a decision.
"Being able to enjoy cheaper repayments for 10 years is quite enticing. The money saved can be used on other expenses," she said.
songyuan@sph.com.sg
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