Published 19 April 2011
The Business Times
By Conrad Tan
MAYBANK has launched two new home loan products to attract homebuyers looking to benefit from current low interest rates while affording them some protection against future rate increases.
The bank is offering ‘hybrid rate’ home loans at interest rates that are pegged to the floating three-month Sibor, or interbank lending rate – now at an all-time low of 0.4375 per cent – in the first year, and that are fixed for the next one or two years. Thereafter, the rates charged are again variable and pegged to Sibor.
Interest on the loans, which are offered for public housing and completed private homes, is 0.75 of a percentage point above Sibor in the first year. In the second year, the borrower pays a fixed rate of 1.48 per cent. Thereafter, the rate is one percentage point above Sibor.
The borrower can also choose to pay a fixed rate of 2 per cent in the third year, after which he again pays interest of one percentage point above Sibor.
‘We are now experiencing historic low interbank rates and market expectations are that interest rates are likely to trend upwards in the next six to 12 months,’ said Helen Neo, head of consumer banking at Maybank Singapore.
The bank is also offering a ‘ceiling rate’ home loan with interest starting at 0.9 percentage point above the three-month swap offer rate or SOR – now at about 0.2 per cent – and rising to 1.25 points above the SOR in the third year, but with the promise that the total interest paid won’t exceed 3 per cent a year in the first three years, even if the SOR rises sharply.
From the fourth year onwards, the interest rate is pegged at one percentage point above the SOR.
The bank is also offering a similar ceiling-rate package that starts at one percentage point above the SOR and rises to 1.25 point above the SOR in the third year – but with the total interest paid in each of the first five years capped at 4.08 per cent.
From the sixth year onwards, the rate is pegged at one percentage point above the SOR. The ceiling rate home loans are available for buyers of completed private homes only.
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