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Different Types of Housing Loan Packages Offered by Banks in Singapore

Written by Admin on .

If you are looking for housing loan, you will realise that there are a few different types of packages to choose from. Home loan borrowers are spoilt for choice with a myriad of loan packages that are offered by banks. 
 
More than a decade ago, you can only find housing loan packages that are pegged to bank’s board rates. Bank’s board rate is internal cost set by the bank. Around 2006-2007, banks introduced packages that are pegged to SIBOR (Singapore Interbank Offer Rate) or Swap Offer Rate (SOR) which offers more transparency. SIBOR and SOR are considered market rates.
 
In 2014, we saw DBS launched home loan packages pegged to their Fixed Deposit rate. The other banks, like UOB, OCBC and Stanchart, also followed suit in offering mortgages pegged to banks' fixed deposit rates. 
 
With this, we came across more customers checking on the differences between property loan pegged to SIBOR, Fixed Deposit rates and Board rates. 

Deciphering MAS Broadening of Exemption from TDSR Threshold for Refinancing

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Since the TDSR threshold of 60% took effect on 29 June 2013, not only property buyers are affected, borrowers with existing housing loans are facing challenges refinancing their loans. MAS’s announcement on 10 February 2014 on the broadening of exemption from TDSR threshold has provided some relief to these borrowers. The news has brought about a surge in the number of enquiries related to refinancing. 
 
Here, we decipher the latest MAS announcement, which comes in two parts:

MSR Requirement Now Applicable to EC

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The latest ruling in Dec 2013 is the adoption of the Mortgage Service Ratio (MSR) for purpose of calculating the housing loan amount to be granted for Executive Condominum (EC) by banks.
 
With this change, housing loans granted for purchase of resale HDB flats, Build-to-Order (BTO) flats as well as EC are required to meet both the MSR and TDSR calculations.  Previously, the housing loan granted for EC was based on the TDSR calculation only.