Which Lender Has The Best Mortgage Rates

Which Lender Has The Best Mortgage Rates – UOB has raised the rate on the three-year fixed rate package to 3.08% per annum. Photo: File ST

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Which Lender Has The Best Mortgage Rates

Which Lender Has The Best Mortgage Rates

SINGAPORE – Home loan rates in Singapore rose by more than 3 percent following UOB’s latest move.

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UOB on Wednesday night (June 29) raised its three-year fixed rate package to 3.08% per annum from 2.8% previously.

UOB said there was no change in its floating rate package, which was set at Singapore’s three-month compounded average rate (SORA) and a margin of 0.8 percent.

The rate for the two-year fixed rate package rose to 2.98 percent from 2.65 percent per annum.

Citi also confirmed to The Straits Times that the two-year fixed rate package for Citigold customers will cost 2.95%, 0.05 percentage points below the 3% threshold.

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On Wednesday, Singapore’s biggest lender DBS Bank raised rates on its two- and three-year fixed-rate packages to 2.75 percent.

The bank has taken a five-year fixed rate package of 2.05% exclusively for housing board home owners.

Home loan rates in Singapore have seen a sustained upward trend since the fourth quarter of last year, with three-year fixed rates at 1.15 percent.

Which Lender Has The Best Mortgage Rates

They have accelerated further this year after the US Federal Reserve began raising rates sharply to combat rising inflation.

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The Fed has raised rates three times so far this year by a total of 150 basis points, or 1.5 percent, keeping the benchmark rate within a range of 1.5 percent to 1.75 percent.

Mr Clive Chang, mortgage adviser at mortgage broker Redbrick, said that in this inflationary environment, the bank’s hedging costs were becoming more expensive and they had to raise rates to cover their costs.

Mr Ernest Tai, a real estate consultant at Huttons Asia, said fixed rates take into account future trends.

Singapore home loan rates will continue to rise from the fourth quarter of 2021, with three-year fixed rates standing at 1.15 percent. It accelerated further after the US Federal Reserve began raising rates in 2022.

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As rates are expected to rise, Mr Tay added, banks will have to increase this rate and therefore raise their rates.

Mr. Kevin Kwek, senior analyst at Sanford C. Bernstein, said the rate of growth may slow going forward.

“The first bearish hikes by the banks are in place, the forecast for the yield curve is now more about how the hikes will play out,” he added.

Which Lender Has The Best Mortgage Rates

Mr Chang has a three-year fixed term loan with DBS at 1.75% due in the second quarter of next year.

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“There is no point in losing sleep over it. What kind of plan are you going to take to reduce the impact. It will go through this period and it will calm down to some extent,” he added.

Mr. Chang stated that he is prepared to pay 15 percent of the principal amount of the loan to reduce the interest payment, adding that he has the surplus funds to do so.

Last week, OCBC Bank told ST that it has reintroduced its two-year fixed rate package at 2.65% per annum.

DBS has a hybrid fixed and variable rate package, offering a compounded rate of up to 1.7182% if the borrower chooses to take 30% of the loan at a two-year fixed rate and 70% at a variable rate. Tariff package.

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Real estate analysts, especially the US Federal Reserve They believe further mortgage rates are on the way after Wednesday (May 4) announced the biggest rate hike since 2000.

A relatively large increase in borrowing costs has prompted analysts and banks to warn homebuyers to set aside enough savings as “collateral” and seek new loan packages or arrangements if necessary.

Which Lender Has The Best Mortgage Rates

For two-year fixed loans, Singapore’s average bank rate rose to 2.25 per cent in May from 1.15 per cent in December last year, according to mortgage consultancy Redbrick, which compares interest rates from different banks.

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For a three-year fixed mortgage, the rate rose from 1.15 percent in December to 2.5 percent in May.

Variable interest rates linked to benchmarks such as the three-month Singapore Interbank Offered Rate (SIBOR) and the Singapore Average Overnight Rate (SORA) also rose, Redbrick said.

The three-month Sibor increased from 0.43% to 1.05%, while the three-month Sora increased from 0.15% to 0.30% compared to the previous quarter.

Sibor and Sora are reference rates used by banks, for example, to set certain mortgage rates for property buyers.

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The rise in mortgage interest rates has been more pronounced in the last two months than in the previous four months. The two-year fixed mortgage rate rose 0.25 percentage points to 1.4 percent in March from 1.15 percent in December 2021, and rose 0.85 percentage points to 2.25 percent in May.

Mr Nicholas Mack, head of research and consultancy at real estate agency Ira Realty, said mortgage rates in Singapore have been on the rise since six months ago when interest rates fluctuated with international interest rates.

This is because the Central Bank of Singapore, the monetary authority of Singapore, controls inflation by coordinating the country’s exchange rate with its major trading partners and does not directly set interest rates.

Which Lender Has The Best Mortgage Rates

Late last year, interest rates in Singapore and globally were relatively low, Mr Mak said.

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“When Covid started two years ago, there was an expectation of an economic slowdown, so central banks lowered interest rates to save economies around the world. However, interest rates are expected to increase since inflation starts to rise. Mr. Nicholas Mack, head of research and consulting at real estate agency ERA Realty

“When Covid started two years ago, it was expected that there would be an economic slowdown, so central banks lowered interest rates to save economies around the world,” Mr Mack said. But since inflation started to rise, there were expectations that interest rates would rise.

But earlier this year, as economies around the world opened up and people started spending more, central banks raised interest rates to cool demand and reduce pressure on prices.

As the Singapore economy, including the money market, is closely linked to global trends, this means that Singaporean banks have raised interest rates, including mortgage rates.

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The rise in home loans over the past two months has been driven in part by worsening global inflation, in part by the energy crisis caused by Russia’s invasion of Ukraine, and by central banks’ response to raising interest rates.

The US Fed’s half-percentage point hike on Wednesday is closely watched because the US is the world’s largest economy and the US dollar is the world’s “reserve currency”.

Mr Steven Tan, chief executive of real estate agency Orange T&T, said: “Some banks have adjusted their interest rates upwards after the Fed’s announcement.” “Interest rates may continue to rise due to persistent inflation.”

Which Lender Has The Best Mortgage Rates

For example, Mr Tan predicts that the two-year fixed mortgage rate will rise to 2.75% from the current 2.25%.

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Ms Joan Tan, Associate Director of Redbrick Mortgage Advisory, said that the SORA rate will increase from 0.3% to 1% in the coming months and the three-month SIBOR rate will rise from 1.05% to 1.6%.

Banks and real estate appraisers must make sure homeowners have enough savings to support changes in mortgage rates in advance.

The main reason is that some banks have changed their package terms. For example, Mr Tan said many foreign banks had recently stopped offering fixed rates.

“It’s always a good idea to go back to your banker to review the current status of your package,” he said.

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Mr Nelson Neo, head of housing finance solutions at DBS’s consumer banking group, said borrowers should set aside enough money as a buffer in case of “further interest rate increases or any other contingencies”.

Agreeing, Ms Marian Phua, Head of Home Loans at OCBC Bank, said borrowers should review their mortgage plans regularly.

“For consumers with existing mortgages, it’s important to review their mortgages from time to time, taking a holistic approach to their pricing, service and terms.

Which Lender Has The Best Mortgage Rates

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