---

Walk down Memory Lane Housing Loans
pre 2007	mid 2007	mid 2007	from Jan 2009
CIMB, MayBank & Hong Leong based on Board Rate	UOB & OCBC introduced SOR package	DBS, HSBC & SCB introduced SIBOR package	DBS adopted Interest rate package pegged to LTV

What is SIBOR?

SIBOR stands for Singapore Interbank Offer Rate and it is a daily reference rate based on the interest rate at which financial institutions offer to lend unsecured funds to other financial institution in the Singapore wholesale money market (or interbank market).

What is SOR?

SOR stands for SWAP Offer Rate and it is one of the 2 exchange-traded interest rate futures products in Singapore. The SOR is an FX forward-implied rate calculated from a three-months USD/SGD forwards with official fixing that is provided for by the Association of Banks in Singapore.

These rates are transparent for they are published daily in the Business Times.

.

3 or 12 months ?

What are the Advantages and Disadvantages?
3-Months (3 month cycle)

Lower base interest rate

Applicable rate changes quarterly (volatile)

Full redemption notification on the commencement of new cycle

12-Months (12 month cycle)

Higher base interest rate as compared to 3 months

Rate is valid for 12 months cycle (stable)

.

Different types of interest rate packages

Reference / Pegged / Transparent Rate
(SIBOR, SOR and CPF)

DBS, HSBC, SCB, UOB, OCBC, POSB

Reference rates offered either on a 3 monthly or 12 monthly rate.

Base rate with a premium to give effective rate.

Bank’s Board Rate

CIMB, HLF, HSBC, Maybank, OCBC, RHB, SCB, UOB

An initial discount is used to offset the respective bank’s board rate to give the effective rate for initial years.

.

Rates are Not everything!

Other than interest rates, other more important aspects to look into include:

Transparency and stability of the interest rate.

Historical rate and market positioning of the respective bank.

Proposed rate after the initial promotional period.

Flexibility of the packages.

Features like partial and full prepayment, loan mobility.

Other facilities like gear up term loan, overdraft, business loan.

Limitations like lock-in period, penalty, and claw back.

Freebies and subsidies.

Credit assessment and guidelines of the respective bank.

Approval consideration.

.

What do banks look out for when granting housing loans?

Monthly income

Monthly CPF contribution

Existing funds in CPF Ordinary Account

Other Financial commitments

Employment profile

Age of borrower/s

Debt servicing ability

Bankruptcy

Credit record

Financial strength of joint borrower (if any)

Liquidity

[Back to Property Financing]

---

*Please note that information provided is as it is basis, whilst every effort has been made to provide up-to-date information.  The author is not responsible for inaccuracies or whatsoever as a result from using this information.

---