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.