Updated: Jan 6, 2020
Few years ago when interest rate climate was still at a relatively low level, fixed deposit linked rate packages were once very popular among home owners. Most of them regarded them as an “alternate safe haven” to fixed rate packages and the popularity arose as their rates were lower than fixed rates. Several home owners even have the impression that fixed deposit linked rate packages offer guaranteed rates just like fixed rates which in fact they are not! It all started from the local banks such as DBS home loan, UOB home loan and OCBC mortgage loan in Singapore offering rates pegged to fixed deposits pegged to 8 months to as long as 36 months. Soon after, foreign banks like HSBC, Maybank and Standard Chartered joined in the wagon.
The low rates stayed for a while until last year where we started to see rate hike on these fixed deposit linked packages. From our observation, most banks have actually increased their rates for such packages 1-2 Times for the past 12 months. With the change in market climate, more home owners are looking to take up fixed rate packages instead. One trend that we noticed is the rate difference in a fixed rate vs a floating rate package is relatively close nowadays.
Get in touch with any of our dedicated mortgage advisory consultant. He/she would be able to analyse and compare 60 different home loan packages from 16 banks in Singapore.