SINGAPORE’S local banks have raised the interest rates on their fixed-rate home loan packages to 3.5 per cent and above, weeks after DBS and UOB said they were reviewing their fixed-rate offerings.

After hiking the interest rates on fixed-rate home loan packages in late June, DBS is raising its rates further to 3.5 per cent. This is a 0.75 percentage point rise from the earlier 2.75 per cent interest rate offered by Singapore’s largest lender.

Based on DBS’ website on Tuesday (Oct 4) morning, the revised interest rate now applies across all four of the bank’s fixed rate packages with commitment periods ranging from two to five years.

The move comes after fresh measures were introduced by Singapore’s government to tighten limits on housing loans with effect from Sep 30, in a bid to ensure prudent borrowing and moderate demand.

DBS last raised its interest rates on all fixed-rate home loan packages to 2.75 per cent per annum, from just 1.65 per cent for a two-year fixed loan and 1.85 per cent for three-year loans previously. As at end-June, the move placed its rates as the highest among the trio of local banks.

Meanwhile, UOB on Oct 4 disclosed that its two-year and three-year fixed rate home loan packages now bear per annum interest rates of 3.75 per cent and 3.85 per cent, respectively.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

UOB’s fixed rate for two-year home loan packages was 2.98 per cent as at Jun 29.

On Sep 23, UOB temporarily ceased its two and three-year fixed rate packages as it was reviewing its offering, following news of another interest rate hike by the Federal Reserve.

As for OCBC, its two-year fixed rate has been revised to 3.5 per cent, up from 2.98 per cent as at Sep 23. The lender is also relaunching a one-year fixed rate package at 3.35 per cent, it said on Oct 4. 

The re-introduction of the one-year fixed rate comes as more customers are seeking stability in their home loan rates and also looking for shorter lock-in periods to enjoy greater flexibility, said Phang Lah Hwa, head of consumer secured lending at OCBC.

“Some of these are customers who plan to sell their properties in the near future, while there are others who believe that interest rates may start to come off from the end of next year,” she noted.

Additionally, OCBC markets “online exclusive interest rates” for its HDB and private home loan packages at one-month or three-month compounded Singapore Overnight Rate Average (Sora) rates, with a spread of +0.98 percentage point in the first and second years, and +1 percentage point spread for year three and thereafter.

In comparison, DBS’ floating-rate packages remain at a three-month compounded Sora with a spread of +1 percentage point across all two- to five-year lock-in periods.

As part of its promotion for new direct-to-bank customers only, UOB on its website offers its home loan packages at a three-month compounded Sora with a 0.7 percentage point spread for the first two years, followed by a spread of 0.8 percentage point spread in year three and 1 percentage point in the fourth year and thereafter.

“We strongly encourage homeowners to speak with their banks as early as possible to better understand how changes in interest rates will affect their home loans, the steps they can take to mitigate any adverse risk and select a loan package that best suits his or her situation,” said Jacquelyn Tan, UOB’s head of group personal financial services.