DBS is easily one of the biggest players in the mortgage market in Singapore, thanks to its wide variety of DBS home loan packages including some pretty unique offers that address borrowers' concerns on affordability and stability in their monthly repayments. One of their home loan packages, the DBS FHR18, has been gaining popularity in the past year due to rising SIBOR and SOR rates in Singapore.
Best DBS Home Loan Rates
DBS FHR18 Home Loan
One of DBS's most innovative home loan packages is the DBS Fixed Deposit Home Rate (FHR), which is a floating rate home loan pegged to the bank's fixed deposit rate.
DBS FHR18 refers to its prevailing 18-month Singapore Dollar fixed deposit rates for amounts between $1000 to $9999 as a base rate, plus a spread to determine the effective interest rate.
DBS is the first bank in Singapore to offer such a mortgage. As the mortgage is being pegged to the bank's fixed deposit where the rate is readily available, this means better transparency in the pricing of the effective interest rates.
The FHR18 mortgage package would also be less volatile since DBS already holds the lion's share of deposits in Singapore and it is unlikely to raise its fixed deposit rates significantly to compete in the Fixed Deposits market here.
Since its launch, this product has resonated well with consumers, with some 80% of new loans at DBS priced off an FD rate.
DBS FHR18 Mortgage vs OCBC 36M Fixed Deposit-Linked Home Loan
Similar to its sole market contender, the OCBC 36M Fixed Deposit-linked Mortgage, the DBS FHR18 is pegged to the bank's prevailing fixed deposit rate.
Sans the slight difference in the applicable FD rate, the underlying benefits of both mortgages are very much the same, with both offering greater stability and transparency in the effective interest rates per annum charged on the loan amount.
DBS does seem to be the more versatile of the two banks in the pricing of the FD-linked Mortgage as it offers a greater variety of spreads (fixed percentage applied on top of the FD rate) for borrowers to choose from.
That said, OCBC's FD-linked Mortgage is also appealing as it offers borrowers the flexibility to reprice their loan package for free should the bank's fixed deposit rate increases.
More Stable Floating Rates, But Not Without Risk
As with the majority of home loan packages, the FD-linked Mortgage may come with a minimum lock-in period, which is typically 2 or 3 years.
What this means is that you run a risk of paying more than those with loans pegged to the SIBOR or SOR if these benchmark rates are to plunge, and you are tied to your existing mortgage rate during the lock-in period.
Also, do note that the bank is at liberty to increase its FD rates or even the fixed percentage that's added on to the FD rate at anytime. Hence, it's wise to stay prepared to pick up better home loan options when they come your way.
Home Loan Tips
Before taking the plunge and buying your first home, it's good to know the risks involved and understand the different types of home loans you can get and what each type really means.
You should always compare different home loan packages before deciding on a home loan so that you can find the one that suits your particular needs best.
We know that this can be daunting and time consuming, that's why we at GET.com have compiled the most useful tips and information in our home loans guide to help you be more well-informed about home loans so that you can make an informed decision.
Purchasing a home can be a big asset, if you're thinking of buying your first home, read our home buying guide for first-time buyers in Singapore.
If you're buying an HDB or a private property, you can read about the differences between HDB loans and bank loans here to find out which one is better for your situation.
To compare the latest FD-linked home loan packages, floating rate packages and fixed rate packages you can use GET.com's Home Loans Genius Tool to find all the latest rates from the biggest banks in Singapore.