DBS FHR vs OCBC FDMR (Comparison)

[MortgageGuru]

With the popular DBS's FHR facing its first direct competitor last month, I've decided to do a comparison here for borrowers who are stuck in between which floating rate is a better one.


OCBC package as below for private loan
1-3 years: 1.03% + FDMR36 (Fixed Deposit Mortgage Rate based on 36 months FD rate currently at 0.65%)
Thereafter: 1.50% + FDMR
Free conversion if there's any adjustment to FDMR
Lock-in Period: 2 years

Let me point out why does this package pale in comparison to DBS's FHR pegged loans.

This package from OCBC is similar to DBS package below;

1-3 years: 1.05% + FHR18 (Fixed Home Rate based on 18 months FD rate currently at 0.5%)
Thereafter 1.80% + FHR18
To take up mortgage insurance with Aviva (Monthly Fees can be as low as $30+ depending on the coverage that you're taking up)
Lock-in Period: 2 years
No partial prepayment penalty



In Singapore, majority of the market shares of FD goes to DBS as you can see that as a Government owned Bank, it automatically etched into people's mind that the Bank is most stable one of all in the island. Everywhere you go, you can always seem to find one of their Branch/ATMs nearby(for every one UOB/OCBC ATM, you find two or more DBS ATM usually).

With their majority shares on FD in the market, raising their FD will means that they have to payout to their customer the same interest as well which doesn't help them to get more client from mortgage sales.

Now we look onto the difference between the two effective rate.

DBS: 1.55%
OCBC: 1.68%

http://i63.tinypic.com/k9z0jd.jpg

You can see the difference of it on the attachment that I've attached for a $1,000,000.00 loan with 30 years tenure.

Assuming interest don't go up, 3 years interest savings at DBS is already $3,794.03 more than OCBC.
Now that we're talking about interest remaining low for FD, I'll explain why DBS FD is better than OCBC FD.

DBS started this FHR product about 2 years back in 2013, nearly 3 years since it came into the market while OCBC just started 1 month ago. It started out with FD based on the average of 12 & 24 months which is at 0.25% and 0.55% respectively, deriving at 0.4% effective rate. Until recently that they decided to come up with FHR based on 18 months FD which I'd like to think that they're not earning much from this package as they want to keep FHR low, but at the same time, not wanting to increase the spread again.

With SIBOR going up tremendously since the start of year 2015, DBS FHR remains stagnant at 0.4% despite 3Month SIBOR(most common type of SIBOR that Singapore borrowers take up out from the rest of 1M,6M & 12M) going up 150% from 0.4% to 1% currently.
This shows that package pegged to FD rates likely stays more stable compared to SIBOR pegged. However, we're talking about FD from OCBC right here so we'll be back to it.

DBS FD rates is based on 18 months while OCBC is set at 36 months.
The difference is simple if you ever owned a FD account.
18 months FD means you're not tied that long compared to 36 months. When you're tied down longer, naturally, your interest yield is higher.
With Singapore Savings Bonds introduced few months back, it means competition indirectly to both bank. This means that OCBC has the higher possibility to shift up their interest to attract customer to save money with them as they;

- do not have the majority share in the market.
- 36 months FD needs to give out higher interest than 18 months FD, logically.

Very clearly, you can see that OCBC has a higher possibility to increase their FD compared to DBS.

1) Their FD is not on the same level playing field as DBS which means their FD is on a disadvantage and will always remain higher than DBS until they come up with FDMR18 months to match DBS's FHR18. (Apple to Apple comparison)

2) Free conversion doesn't help anything at all because when FDMR goes up, naturally, Board Rate and SIBOR pegged package are already ahead of them as FD rates is the last among the three to make any adjustment. (Eg: during March this year, most OCBC borrower(more than 2 years old client on their current loan) should received a letter from OCBC indicating that board rate increased from 4.5% to 5.1%) Should you convert to a free conversion, you'll be locked for another 2-3 years again which is not ideal for a board rate loan as you can see what happened to many borrowers from OCBC and UOB early this year, being subject to the bank's mercy.

[Kelonguni]

But if refinancing with another bank incurs refinancing charges above 3-4K, then all savings is gone for OCBC customer.

[MortgageGuru]

But if refinancing with another bank incurs refinancing charges above 3-4K, then all savings is gone for OCBC customer.

yes you are right on it, I'm saying about taking up a new loan or currently not from OCBC existing then makes much sense.
for existing, as long as loan above $1M will be good enough as subsidy can be obtained!

[Kelonguni]

Thanks. Both are actually decent deals still featuring interest rates below 2% for the next few years. Shiok!

[MortgageGuru]

Thanks. Both are actually decent deals still featuring interest rates below 2% for the next few years. Shiok!

If I'm buying a property, I'll go with DBS package definitely for the circumstances now. It makes more sense compared to OCBC 36 months FD.

[amk]

There is no need to compare. A 18m rate is lower than 36m rate, by default.

Separately, you need to educate ppl on the complete and total uselessness of "free conversion" feature of any loan package. Not because of the reasons you mentioned, but because of this one: the loan packages that are "available for your free conversion" are completely at bank's discretion, and have nothing to do with whatever prevailing rates or promotions at that time.

Example: your current rate is 2%, you are not happy about the rate, you go ask for "free conversion"
bank: "no problem, for you the free conversion rate will be xxx plus ###, that is 2.5% today".
you: "but your current rate for new mortgage either refinance or new loan is xxx plus ## 1.8% only ? I want that one"
bank: "yea but that package is not available to you. for conversion you only have this."

[Kelonguni]

But actually if no free conversion there will be charges for repricing no? Like $800...


There is no need to compare. A 18m rate is lower than 36m rate, by default.

Separately, you need to educate ppl on the complete and total uselessness of "free conversion" feature of any loan package. Not because of the reasons you mentioned, but because of this one: the loan packages that are "available for your free conversion" are completely at bank's discretion, and have nothing to do with whatever prevailing rates or promotions at that time.

Example: your current rate is 2%, you are not happy about the rate, you go ask for "free conversion"
bank: "no problem, for you the free conversion rate will be xxx plus ###, that is 2.5% today".
you: "but your current rate for new mortgage either refinance or new loan is xxx plus ## 1.8% only ? I want that one"
bank: "yea but that package is not available to you. for conversion you only have this."

[MortgageGuru]

Educating people on the free conversion being useless I do agree.
But some times, a bank will waive off it if the loan amount is more than a million. So it still depends largely on the current environment by then.

[Kelonguni]

Educating people on the free conversion being useless I do agree.
But some times, a bank will waive off it if the loan amount is more than a million. So it still depends largely on the current environment by then.

True also, but sooner or later the loan has to go below 1million. The threshold is still pretty high. But it's great to know options so we can do some long term evaluation.

[MortgageGuru]

When your loan goes lower and your age go higher, it's time for retirement and that's the time you have to source for loans that allows you to have a peaceful time in the thereafter years when you do not have any income anymore and 1.25+fhr is the kind of loan that suits best for people in such situation.

[MortgageGuru]

FED announced interest rise, I will update this space once there's movement on loan package from banks.
With what happened early this year, we should see bank spiking up the rates very soon.

[teddybear]

What about after 3rd year till end of 30 years period (assuming the difference between FDMR and FHR is fixed)?

How about comparing to 3M SIBOR + 1.25% throughout?



With the popular DBS's FHR facing its first direct competitor last month, I've decided to do a comparison here for borrowers who are stuck in between which floating rate is a better one.


OCBC package as below for private loan
1-3 years: 1.03% + FDMR36 (Fixed Deposit Mortgage Rate based on 36 months FD rate currently at 0.65%)
Thereafter: 1.50% + FDMR
Free conversion if there's any adjustment to FDMR
Lock-in Period: 2 years

Let me point out why does this package pale in comparison to DBS's FHR pegged loans.

This package from OCBC is similar to DBS package below;

1-3 years: 1.05% + FHR18 (Fixed Home Rate based on 18 months FD rate currently at 0.5%)
Thereafter 1.80% + FHR18
To take up mortgage insurance with Aviva (Monthly Fees can be as low as $30+ depending on the coverage that you're taking up)
Lock-in Period: 2 years
No partial prepayment penalty



In Singapore, majority of the market shares of FD goes to DBS as you can see that as a Government owned Bank, it automatically etched into people's mind that the Bank is most stable one of all in the island. Everywhere you go, you can always seem to find one of their Branch/ATMs nearby(for every one UOB/OCBC ATM, you find two or more DBS ATM usually).

With their majority shares on FD in the market, raising their FD will means that they have to payout to their customer the same interest as well which doesn't help them to get more client from mortgage sales.

Now we look onto the difference between the two effective rate.

DBS: 1.55%
OCBC: 1.68%

http://i63.tinypic.com/k9z0jd.jpg

You can see the difference of it on the attachment that I've attached for a $1,000,000.00 loan with 30 years tenure.

Assuming interest don't go up, 3 years interest savings at DBS is already $3,794.03 more than OCBC.
Now that we're talking about interest remaining low for FD, I'll explain why DBS FD is better than OCBC FD.

DBS started this FHR product about 2 years back in 2013, nearly 3 years since it came into the market while OCBC just started 1 month ago. It started out with FD based on the average of 12 & 24 months which is at 0.25% and 0.55% respectively, deriving at 0.4% effective rate. Until recently that they decided to come up with FHR based on 18 months FD which I'd like to think that they're not earning much from this package as they want to keep FHR low, but at the same time, not wanting to increase the spread again.

With SIBOR going up tremendously since the start of year 2015, DBS FHR remains stagnant at 0.4% despite 3Month SIBOR(most common type of SIBOR that Singapore borrowers take up out from the rest of 1M,6M & 12M) going up 150% from 0.4% to 1% currently.
This shows that package pegged to FD rates likely stays more stable compared to SIBOR pegged. However, we're talking about FD from OCBC right here so we'll be back to it.

DBS FD rates is based on 18 months while OCBC is set at 36 months.
The difference is simple if you ever owned a FD account.
18 months FD means you're not tied that long compared to 36 months. When you're tied down longer, naturally, your interest yield is higher.
With Singapore Savings Bonds introduced few months back, it means competition indirectly to both bank. This means that OCBC has the higher possibility to shift up their interest to attract customer to save money with them as they;

- do not have the majority share in the market.
- 36 months FD needs to give out higher interest than 18 months FD, logically.

Very clearly, you can see that OCBC has a higher possibility to increase their FD compared to DBS.

1) Their FD is not on the same level playing field as DBS which means their FD is on a disadvantage and will always remain higher than DBS until they come up with FDMR18 months to match DBS's FHR18. (Apple to Apple comparison)

2) Free conversion doesn't help anything at all because when FDMR goes up, naturally, Board Rate and SIBOR pegged package are already ahead of them as FD rates is the last among the three to make any adjustment. (Eg: during March this year, most OCBC borrower(more than 2 years old client on their current loan) should received a letter from OCBC indicating that board rate increased from 4.5% to 5.1%) Should you convert to a free conversion, you'll be locked for another 2-3 years again which is not ideal for a board rate loan as you can see what happened to many borrowers from OCBC and UOB early this year, being subject to the bank's mercy.

[teddybear]

Haven't they already spiked SIBOR rate from about 0.4% to 1.15% despite the fact that there was no Fed rate change then?

If they spike against after having pre-empt Fed rate increase, it becomes questionable, especially when SIBOR is supposed to be a competitive rate (and there is FHR still at 0.5% to compete with it)........ :sour:

Looks like SIBOR loan is going to be real lousy going forward (unless it really is a competitive rate and not increase like a cartel...)

And I had already warned very long time ago that people should avoid SOR loan (the time when SOR is at like 0.3% and SIBOR at 0.5%), hope nobody here had taken up SOR loan.....


FED announced interest rise, I will update this space once there's movement on loan package from banks.
With what happened early this year, we should see bank spiking up the rates very soon.

[MortgageGuru]

What about after 3rd year till end of 30 years period (assuming the difference between FDMR and FHR is fixed)?

How about comparing to 3M SIBOR + 1.25% throughout?

That's why I recommend 1.25 + fhr instead of 1.05 + fhr as 1.25 is a throughout package.

I don't think 3M sibor is worth a fight against fixed deposit rate at all. Past trend shows fixed deposit rate being low while sibor much higher, even though fix deposit pegged loan only introduced in recent years for dbs, it should already proved that it's much better than sibor when you see ocbc launched their fixed deposit pegged loan just two months ago. I think we can see uob coming up with their own FD pegged loans very soon as well.
You can see sibor/sor creeping up in the past week or so.. definitely will rise higher in the coming week.

[hopeful]

MortgageGuru,
for those with some money,
if we take DBS FHR, do we put FD in DBS?
if we take OCBC FDMR, do we put FD in OCBC?
would not these FD partially offset the FDMR36/FHR18 ?
so would the OCBC deal be better, at least for those with some money?

and for those with some money, would Stanchart Mortgage One be a better deal than both the OCBC and DBS?
because lets say we put FD for 18 months at 0.5% at DBS, to offset the FHR18.
next month, DBS increase the FHR18 to 0.55%. but our FD still earn 0.5% (for the next 17 months), there is a difference of 0.05%.
or does both OCBC and DBS reprice at 36 and 18 months interval respectively?

[MortgageGuru]

MortgageGuru,
for those with some money,
if we take DBS FHR, do we put FD in DBS?
if we take OCBC FDMR, do we put FD in OCBC?
would not these FD partially offset the FDMR36/FHR18 ?
so would the OCBC deal be better, at least for those with some money?

and for those with some money, would Stanchart Mortgage One be a better deal than both the OCBC and DBS?
because lets say we put FD for 18 months at 0.5% at DBS, to offset the FHR18.
next month, DBS increase the FHR18 to 0.55%. but our FD still earn 0.5% (for the next 17 months), there is a difference of 0.05%.
or does both OCBC and DBS reprice at 36 and 18 months interval respectively?

No. You can compared mortgageone with fixed deposit offset.
Mortgage one they go by the amount that you put in and offset a certain percentage up to a capped of the bank. The offset is much significant compared to fixed deposit offset as fixed deposit returns is much lower.
As for the 18 or 36 month reprice issue, they don't reprice or the so called reset date like sibor/sor, sibor/sor have different months of variation for you to choose for as it's based on the reset date, the longer duration of sibor/sor you take up, the higher it is and the commitment will be the number of months for it.
So for example you take a 3 month sibor, your rate reset every 3 month on a certain day of the month, likewise, if you take up 1 month sibor, your rate will reset every 1 month to that certain day of sibor rate. As for fixed deposit pegged loans, they don't tie you down to 36 month or 18 month, they use the chart as the indicative rate for the month to add on top of the spread.
In short, sibor pegged loan can has a higher offset when you take up mortgageone but subject to sibor hike whereby you can offset some back with your FD in it.
As for FD pegged loan, you can't really hedge against it with your FD in it because when your loan rate increase, your FD doesn't increase.

[MortgageGuru]

update: FHR18 increased by 0.1%

No news on FHR12&24, take it as good news for no news.

May refer to here for the FD rates at DBS.

http://www.dbs.com.sg/personal/rates-online/singapore-dollar-fixed-deposits.page

[MortgageGuru]

update: FHR18 increased by 0.1%

FHR12&24, increased by 0.1% as well.

May refer to here for the FD rates at DBS.

http://www.dbs.com.sg/personal/rates-online/singapore-dollar-fixed-deposits.page

[newbie11]

U sure 0.1 for fhr? :)

[MortgageGuru]

U sure 0.1 for fhr? :)

yes. spread remains the same, just fhr increasing.

[MortgageGuru]

update: FHR18 increased by 0.1%

FHR12&24, increased by 0.1% as well.

May refer to here for the FD rates at DBS.

http://www.dbs.com.sg/personal/rates-online/singapore-dollar-fixed-deposits.page

Sorry, note the difference...

*FHR 12&24 months increased by 0.275 to 0.675 instead of 0.1.

FHR18 increased by 0.1 to 0.6.

[proud owner]

Has SIBOR increased at all after the FED rate hike ?


So have those who took up FIXED rate since H2 benefitted ?

Or have those who took up Floating rate actually better off ?

[MortgageGuru]

It depends. Fixed rate holder may have a peace of mind right now.
Sibor not yet making any stark movement so far.
If there's no further jump on fhr for the first half of 2016, fhr will still be a good choice. Took almost a year for fhr to rise after sibor hike, I stand by fhr choice.

[sophiel]

Im looking at repricing my mortgage with OCBC and lost between the different options:
- Fixed rate for 2 years (2.18%)
- 36 months FDMR based (1.78% based on 36 FDMR - 1.13%)
- SIBOR pegged (around 2% based on current SIBOR)
- Board Rate Based (1.68% based on current board rate)
I've read the previous threads but quite lost.

Would be tempted to forget about Board Rate based as totally at the discretion of OCBC to increase and looking for something determined more "objectively".
SIBOR does not seem very interesting compared to Fixed Rate
But difference between 36 months FDMR compared to fixed rate is quite large so i would be tempted to go with FDMR based.

[MortgageGuru]

Im looking at repricing my mortgage with OCBC and lost between the different options:
- Fixed rate for 2 years (2.18%)
- 36 months FDMR based (1.78% based on 36 FDMR - 1.13%)
- SIBOR pegged (around 2% based on current SIBOR)
- Board Rate Based (1.68% based on current board rate)
I've read the previous threads but quite lost.

Would be tempted to forget about Board Rate based as totally at the discretion of OCBC to increase and looking for something determined more "objectively".
SIBOR does not seem very interesting compared to Fixed Rate
But difference between 36 months FDMR compared to fixed rate is quite large so i would be tempted to go with FDMR based.

Taking up FDMR is good also. You should!

[henryhk]

For the Dbs $800 repricing fee, can use cpf to settle?

[MortgageGuru]

For the Dbs $800 repricing fee, can use cpf to settle?

Only cash!

[DC33_2008]

Is it true that purchase of DBS 18FHR home loan has to purchase their Mortgage insurance?

[MortgageGuru]

Is it true that purchase of DBS 18FHR home loan has to purchase their Mortgage insurance?

Yes you're right.
Have to take up mortgage insurance or else the spread will be 0.1% higher.
However, if your loan is more than 3M, dbs allows 1.88% fixed for 3 years.

[DC33_2008]

How about UOB home loan as compared to OCBC and dbs?
Yes you're right.
Have to take up mortgage insurance or else the spread will be 0.1% higher.
However, if your loan is more than 3M, dbs allows 1.88% fixed for 3 years.

[MortgageGuru]

Actually besides fixed rates, I'll only recommend loans that are pegged to FD rates. UOB doesn't offers that.
In any case, it's better to know what's your intention in the future in order to assess better as different people has different situation and different needs.
Some just want a peace of mind for the next couple of years while others want equity in hands etc. Many scenarios can happen, so it's basically up to your needs.

[spikey69]

Just got my letter that my DBS FHR loan has increased from 1.5% to 1.75%....sigh

[proud owner]

Just got my letter that my DBS FHR loan has increased from 1.5% to 1.75%....sigh

what does FHR stands for ?

[henryhk]

Why it increase? Sudden increase?

[eric3417]

DBS wan earn $$$ lo…
Since FHR loan past 2yrs piled up.
Time to milk the cow…

lol

[MortgageGuru]

Just got my letter that my DBS FHR loan has increased from 1.5% to 1.75%....sigh

Isn't it supposed to be quite some time ago when dbs raise it?

[cbsh38584]

Actually besides fixed rates, I'll only recommend loans that are pegged to FD rates. UOB doesn't offers that.
In any case, it's better to know what's your intention in the future in order to assess better as different people has different situation and different needs.
Some just want a peace of mind for the next couple of years while others want equity in hands etc. Many scenarios can happen, so it's basically up to your needs.


Hi Mortgage Guru,

My friend HDB loan (less than 180k) is with Maybank. Because of the TDSR, he cannot reprice or
refinance. He got to pay 4% interest or do a lump sum payment to his HDB loan. He got the cash
to pay up but prefer to have a fixed mortgage loan <2%. He is self employed .Do U have any
recommend for him so that I can ask him to approach U ? no private ppty.

------------------------------------------------------------------------------------------------------------
I took a mortgage loan ( 3 mth sibor) with Std chart in early 2011.

private ppty
1st year 0.65 + 3 mth sibor
2nd year 0.65...
3rd year 0.85...
4th year 0.85..
There after 0.9% + 3 mth sibor.

*** 2/3 of my deposits enjoy the same interest rate as my mortgage loan. Whilst the
remaining 1/3 deposit s will enjoy a competitive interest rate.

The actual loan interest payment is on Nov 2013. (40% progressive payment) Now my interest
rate is 1.92% start from Jan16. I believe it will go up in Apr 16 as 3 mths sibor rate has gone
up also. I would like to refinance to fixed rate but I may fail my TDSR . I still can pay up the full
amt but I want to use the cash to invest in safe Fixed income for better return >3%.


Just last week, I receive a SMS from a unknown loan specialist . They offer 1.65% but
I delete off as I don't trust anything from SMS. Do U have any advise ?


FYI, I do have a HDB mortgage loan ($210k) with Maybank.
1st year 1.55% (started in 2014)
2nd year 1.75% (now should be 2% as the SRFR has changed from 3.75% to 4%)
3rd year 1.85%

rdgs,
Vic

[MortgageGuru]

DBS latest fhr package at 1.2% + fhr18 THROUGHOUT!
THROUGHOUT! Don't miss it!
FHR currently at 0.6%.
Best package in the market now!

[DMCK]

DBS just reduce my sibor rate from 1.7 to 1.5

[MortgageGuru]

DBS just reduce my sibor rate from 1.7 to 1.5

Is it based on 3 month sibor?
Lucky you if yes! Get to enjoy 3 months of low interest as sibor dipping a little for the past week.

[Kelonguni]

How will zero appreciation affect (if any) interest rates?

[wildfaye29]

Now SCB also got FDR package??

[wildfaye29]

I heard its FDR 0.5 +1.15

FDR is based on 48mths

[amk]

this is getting weird.
nobody places a FD for 48mths.
that would mean SCB can raise a little used rate easily in future.