Singapore home loan rates hit new high of 3.08% with latest move by UOB
Singapore home loan rates hit new high of 3.08% with latest move by UOB. With UOB’s latest move, home loan rates in Singapore have risen above 3% to a new high. The previous recent high was 2.88 percent in mid-2019.
UOB raised the rate on its three-year fixed rate package to 3.08 percent per annum on Wednesday night (June 29), up from 2.8 percent previously. UOB said there will be no changes to its floating rate package, which is based on the three-month compounded Singapore Overnight Rate Average (Sora) plus a 0.8% margin. The rate for its two-year fixed rate package was raised from 2.65% to 2.98% per annum.
Citi also confirmed to The Straits Times that the rate for its new two-year fixed rate package for Citigold clients is 2.95 percent, just 0.05 percent shy of 3 percent.
On Wednesday, DBS Bank, Singapore’s largest lender, raised its two- and three-year fixed rate packages to 2.75 percent. In addition, the bank discontinued a five-year fixed rate package at 2.05 percent that was only available to Housing Board home owners. Since the fourth quarter of last year, when three-year fixed rates were at 1.15 percent, Singapore home loan rates have been steadily rising.
They accelerated higher this year after the United States Federal Reserve began aggressively raising rates to combat high inflation. So far this year, the Fed has raised rates three times by a total of 150 basis points, or 1.5 percentage points, bringing its benchmark rate to a range of 1.5 percent to 1.75 percent.
According to Mr Clive Chng, associate director of mortgage broker Redbrick Mortgage Advisory, in this rising rate environment, the bank’s hedging costs have increased, forcing them to raise rates to cover their costs. Fixed rates, according to Mr Ernest Tay, a real estate consultant at Huttons Asia, take into account the future rate trajectory. Mr Tay added that with interest rates expected to rise, banks must price that in and thus raise their rates.
Rate hike momentum may slow in the future, according to Mr. Kevin Kwek, a senior analyst at Sanford C. Bernstein. “From the bank’s perspective, aggressive first hikes are in place, and yield curve predictability of how hikes will play out is also higher now,” he added.
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