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UOB and DBS ceasing fixed-rate home loans for now, interest rates under review

Local lenders UOB and DBS are temporarily ceasing their fixed-rate home loans while they review the interest rates on these packages, after yet another big hike from the US Federal Reserve.

A UOB spokesman told The Straits Times that the bank will be ceasing the existing two-year and three-year fixed rate packages for now.

The spokesman added that UOB is continuously monitoring market conditions and will review home loan packages to ensure they remain competitive and can meet the needs of homeowners.

Mr Wayne Quek, director of mortgage consultancy Home Loan Whiz, said hd has received a notice that the UOB packages will not be available after October 5.

Just about two months ago, UOB had upped the rates for its two- and three-year fixed rate packages.

The rate of its two-year fixed package was raised to 2.98 per cent per annum, and 3.08 per cent per annum for its three-year fixed package.

The bank confirmed that it will not completely remove its fixed rate loans.

DBS is also reviewing the rates for its fixed rate packages.

According to ST checks last Tuesday night, DBS fixed rate packages have been removed from the bank’s website.

Back in June, the bank had raised rates on its two-year and three-year fixed rate packages to 2.75 per cent and removed its five-year fixed-rate package for Housing Board flat buyers, which used to offer loans at 2.05 per cent.

At the time, the bank introduced a hybrid two-in-one home loan package which allowed homeowners to choose a mix of fixed and floating rate deals in various proportions, such as 30 per cent fixed and 70 per cent floating.

The bank said the two-in-one hybrid home loan package was still available to homeowners.

The third local bank, OCBC, said it reviews the rates of its home loans packages regularly to ensure its packages remain competitive.

Currently, OCBC has a two-year fixed rate package of 2.98 per cent listed on its website.

The three banks continue to offer floating rate packages pegged to the Singapore Overnight Rate Average (Sora).

UOB's floating rate packages are pegged to the three-month compounded Sora plus a margin of 1 per cent. The bank also has a promotional rate of three-month compounded Sora plus a margin of 0.7 per cent, with two-year lock-in, for new customers.

DBS's offers floating rate packages pegged to the three-month compounded Sora plus a margin of 1 per cent.

OCBC has floating rate packages pegged to the one-month and three-month compounded Sora plus a margin of 0.98 per cent.

The daily Sora rate shot up by about 0.3 percentage points on Friday following the US Federal Reserve's decision to raise interest rates by 0.75 per cent on Wednesday.

The daily Sora rate now stands at 1.9389 per cent, while one-month compounded Sora is at 2.0443 per cent and three-month compounded Sora is at 1.9009 per cent.

The US central bank has raised rates five times since March for a total 300 basis points, or 3 percentage points, as inflation shows no signs of abating in the country.

Interest rates in the US are now between 3 per cent and 3.25 per cent, and could reach 4.4 per cent by the end of 2022.

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