DBS raises home loan rates

SINGAPORE: Home owners in Singapore will have to brace themselves for higher mortgage repayments as local banks continue to raise interest rates for their ...

“If you want to know the outlook for interest rates, just look at the fixed rate packages which have jumped to more than 2.6 per cent. “Ideally, one should set aside some savings in cash or liquid assets that can be used to pay for their monthly instalments for the next two years. They can also consider increasing the use of CPF for their monthly loan repayments, said Mr Wee. DBS on Tuesday raised the rates on all its fixed rate packages to 2.75 per cent per annum. After adding the banks’ (lending margin), floating rate packages may be 2.6 per cent or higher. And that’s just for this year; we haven’t even started talking about next year if inflation rates do not come down.” “Singapore is an interest rate taker due to its small and open economy. Coupled with an open capital market, Singapore’s interest rates are hence largely determined by global interest rates, especially that in the US which is the world’s biggest economy. Echoing similar projections, Mr Wee said that based on expectations for the three-month compounded SORA to hit 2.5 per cent and assuming a margin of 0.8 per cent, home owners may potentially be looking at a net rate of 3.3 per cent for floating rate home loans in the next few months. He added that while it is common for banks to offer higher fixed rates for longer tenures, the bank has set its three-year fixed rate home loan at the same rate as its two-year loan. This compared with 2.45 per cent for a two-year fixed loan and 2.6 per cent for a three-year loan prior to the latest revision. Mr Nelson Neo, head of home financing solutions at DBS Consumer Banking Group, said the bank’s home loan rates and packages are reviewed and adjusted to reflect movements in interest rates following the Fed’s rate hikes.