View Full Version : OCBC Home loan increase by 1%
Hi, I have taken housing loan from OCBC on variable rate linked to Board rate and the same was 4.5% when I had taken home loan.. My Interest rate is as follows :-
Year 1 1.28%
Year 2 1.58%
Year 3 1.88%
I am in my first year of loan and have completed 6 months. I have got letter from them dated 15th April where they have increased my interest rate to 2.28%.. This is significant 1% increase and has pissed me off.
Can any one confirm if they have received similar letter. Also if you have experience from past what are my options.
Bank reserved the right to adjust board Rate. Check the lock in period. Check Repricing options. Else refinance. Not unexpected when sibor was 0.5 to 1.5 and 1 now.
Hi, I have taken housing loan from OCBC on variable rate linked to Board rate and the same was 4.5% when I had taken home loan.. My Interest rate is as follows :-
Year 1 1.28%
Year 2 1.58%
Year 3 1.88%
I am in my first year of loan and have completed 6 months. I have got letter from them dated 15th April where they have increased my interest rate to 2.28%.. This is significant 1% increase and has pissed me off.
Can any one confirm if they have received similar letter. Also if you have experience from past what are my options. never take variable rate...as the word says it can vary.😱 no other options, wait for 1.5 years and reprice again... The penalty for changing is not worth it,.
bargain hunter
23-04-16, 23:33
Hi, I have taken housing loan from OCBC on variable rate linked to Board rate and the same was 4.5% when I had taken home loan.. My Interest rate is as follows :-
Year 1 1.28%
Year 2 1.58%
Year 3 1.88%
I am in my first year of loan and have completed 6 months. I have got letter from them dated 15th April where they have increased my interest rate to 2.28%.. This is significant 1% increase and has pissed me off.
Can any one confirm if they have received similar letter. Also if you have experience from past what are my options.
yup, the word variable said it all. if it was fixed rate then they can't change it.
I think many of us here already iterated this before:
NEVER EVER take BOARD RATE loan!!!!!!!!!!!!
It is NOT the problem with "VARIABLE", but Banks can change BOARD RATE any time they like unilaterally and the so-called "Board Rate" can be different between banks and even between different people at different time!!!!!!!!
Too late for you to know now anyway, but your options now are:
1) Check whether are you locked in and when your lock-in expire?
2) If you are still in lock-in, see whether can re-price to SIBOR or Home Loan Rate pegged package with same bank.
3) If you are not in lock-in, better still, you can refinance for better deal and change to SIBOR or Home loan rate pegged package with any other bank.
Remember: NEVER ever take a home loan with BOARD RATE again, regardless of whatever shit or nonsensical reason (like it is more stable) that your bank or mortgage agents told you!!!!!!!!!
Hi, I have taken housing loan from OCBC on variable rate linked to Board rate and the same was 4.5% when I had taken home loan.. My Interest rate is as follows :-
Year 1 1.28%
Year 2 1.58%
Year 3 1.88%
I am in my first year of loan and have completed 6 months. I have got letter from them dated 15th April where they have increased my interest rate to 2.28%.. This is significant 1% increase and has pissed me off.
Can any one confirm if they have received similar letter. Also if you have experience from past what are my options.
bargain hunter
24-04-16, 08:49
i remembered bank sales pple like to say something like "our board rate has not changed in the last x number of years".
i remembered bank sales pple like to say something like "our board rate has not changed in the last x number of years".
These young sales people know nothing, they may not have taken any loans befo and never experience the agony of increasing interest
bargain hunter
24-04-16, 13:55
These young sales people know nothing, they may not have taken any loans befo and never experience the agony of increasing interest
more like they r keen to close the deal and do not bother with whatever agony borrowers face in future! :(
Even if one takes a SIBOR based housing loan, the bank can also increase its margin. I know of a case where the bank informed the borrower that the rate increased from SIBOR+0.7% to SIBOR+0.9%. Only thing borrowers can do is to refinance as soon as lock in period is over. The best is to take loan with no lock in period.
Thank you for suggestion. I have contacted Bank and trying to re-price using SIBOR Rate Plus. However, I am surprised while checking online don't see Board rate increase of 1% i.e. from 4.5% to 5.5%. Let me clarify with Bank. However, has anyone else got similar increase ?
I think many of us here already iterated this before:
NEVER EVER take BOARD RATE loan!!!!!!!!!!!!
It is NOT the problem with "VARIABLE", but Banks can change BOARD RATE any time they like unilaterally and the so-called "Board Rate" can be different between banks and even between different people at different time!!!!!!!!
Too late for you to know now anyway, but your options now are:
1) Check whether are you locked in and when your lock-in expire?
2) If you are still in lock-in, see whether can re-price to SIBOR or Home Loan Rate pegged package with same bank.
3) If you are not in lock-in, better still, you can refinance for better deal and change to SIBOR or Home loan rate pegged package with any other bank.
Remember: NEVER ever take a home loan with BOARD RATE again, regardless of whatever shit or nonsensical reason (like it is more stable) that your bank or mortgage agents told you!!!!!!!!!
It was Hybrid and not variable.. I can understand some increase but 1% increase is significant.. There is no rationale for this.
Somebody mentioned this before.
The board rate is the most kelong one. Everyone has a different board rate.
It's good for starters. In the long run not much difference lah. I suspect no lock in also or clause to refinance if raise rates. Check with the bank.
It was Hybrid and not variable.. I can understand some increase but 1% increase is significant.. There is no rationale for this.
MortgageGuru
24-04-16, 22:07
UOB and OCBC are the best player in board rate loans.
The sales pitch is pretty standard 'Our board rate never increase for the past X years.'
Your first 3 years is only 1.xx%
Followed by handwritten on the rates for 1-3 years at the side
1st year: 1.2x
2nd year: 1.3x
3rd year 1.6x
Very clever when the rate supposed to be;
3.X below board rate
You're pretty stuck for the next 1.5 years.
Even if one takes a SIBOR based housing loan, the bank can also increase its margin. I know of a case where the bank informed the borrower that the rate increased from SIBOR+0.7% to SIBOR+0.9%.
is this the Citibank case again ? you should get your friend to complain to MAS strongly.
To be fair, no one else has ever done this on SIBOR/SOR rates. It's only Citibank.
SIBOR/SOR packages are still the most transparent/fair floating rate packages today.
Hi, I have taken housing loan from OCBC on variable rate linked to Board rate and the same was 4.5% when I had taken home loan.. My Interest rate is as follows :-
Year 1 1.28%
Year 2 1.58%
Year 3 1.88%
I am in my first year of loan and have completed 6 months. I have got letter from them dated 15th April where they have increased my interest rate to 2.28%.. This is significant 1% increase and has pissed me off.
Can any one confirm if they have received similar letter. Also if you have experience from past what are my options.
Yup. Happened to me too. Now 2.28%.
Just refinanced with them, and 3 months later, they chut pattern. Should have gone for fixed..or a different bank.
OCBC. I think got escape clause lah.
is this the Citibank case again ? you should get your friend to complain to MAS strongly.
To be fair, no one else has ever done this on SIBOR/SOR rates. It's only Citibank.
SIBOR/SOR packages are still the most transparent/fair floating rate packages today.
Escape clause or not, as long as the clause is not written in the main loan document in a clear and un-ambiguous way, there is room to complain to MAS (as it is clear the "practise" is to mislead, just like the bank counter-girls trying to sell "structured deposits" saying they are "no difference from fixed deposits".......).................
While DBS in HK need to compensate their clients, am I right to say that DBS in SG had gotten away with it with no penalty for selling the same minibonds / structured deposits in SG?
OCBC. I think got escape clause lah.
The loan letter of offer may contain words such as "..for the avoidance of doubts, the bank may without notice at anytime from time to time review and adjust any interest rates..."
The above type words may be found in loan offer letters regardless of whether SIBOR, board rate or FD rate based. Please check yours and share with us here whether yours contain such wordings and which bank is it. I know OCBC offer letters have such wordings.
For Board rate loan, the board rate itself is the interest rate, and since the board rate is set by the bank itself unilaterally as they like, people taking board rate loan have no recourse.
However, the case is different for SIBOR-pegged or FDR-pegged loans. Because such loans come with "interest rate + spread" component. Hence, it is clear to us that the "review and adjust any interest rates..." refers to the SIBOR rate or FDR-pegged rate, not the spread (i.e. +X%).
If they are referring to the spread, they would have to word it un-ambiguously as "bank may without notice at anytime from time to time review and adjust the SPREAD %...". Failing to do so, they have no right to change the spread, since in wording it was always written as e.g. "loan interest rate at SIBOR + X%" (note the "+X%" is a fixed number!) and if they do try to change the spread % they are just bluffing you and see whether people are stupid enough to allow them to do whatever they like without challenging them............ :topsy_turvy:
I would believe that MAS would do something if people complaint directly to MAS and make enough noise and raise enough awareness for everybody in Singapore and the world to know about this particular bank that makes the first precedent in trying to unilaterally change the fixed spread despite NOT being worded into their loan contract......
The loan letter of offer may contain words such as "..for the avoidance of doubts, the bank may without notice at anytime from time to time review and adjust any interest rates..."
The above type words may be found in loan offer letters regardless of whether SIBOR, board rate or FD rate based. Please check yours.
Which bank are you referring to?
For people who are suffering from bank(s) changing fixed spread unilaterally despite not being worded into the loan contract, they should:
1) Complain to MAS
2) Write letter to Forum of Straits Times etc (and spell out the name of the bank clearly).
3) Post such news on online forums like CondoSingapore and spell out the name of the bank clearly to let all of us here know which bank(s) is doing that. This will help others to avoid doing business with those bank! Not only will they lose mortgage loan business, they will also lose priority/privilege/private banking / wealth management business as well! Who will trust such bank who try to take advantage of their client and without sticking to their side of a contract??? I definitely won't!
There is no need to be scared of naming the bank if what you are stating are facts (because I know some people so scared to name the bank / entity that are doing bad things to them and I don't know why they so scared for what for telling the TRUTH???)
Even if one takes a SIBOR based housing loan, the bank can also increase its margin. I know of a case where the bank informed the borrower that the rate increased from SIBOR+0.7% to SIBOR+0.9%. Only thing borrowers can do is to refinance as soon as lock in period is over. The best is to take loan with no lock in period.
Salute Teddybear.
Hope the banks learn from this and deliver on at least 1 type of interest rate they promote strongly.
Which bank are you referring to?
For people who are suffering from bank(s) changing fixed spread unilaterally despite not being worded into the loan contract, they should:
1) Complain to MAS
2) Write letter to Forum of Straits Times etc (and spell out the name of the bank clearly).
3) Post such news on online forums like CondoSingapore and spell out the name of the bank clearly to let all of us here know which bank(s) is doing that. This will help others to avoid doing business with those bank! Not only will they lose mortgage loan business, they will also lose priority/privilege/private banking / wealth management business as well! Who will trust such bank who try to take advantage of their client and without sticking to their side of a contract??? I definitely won't!
There is no need to be scared of naming the bank if what you are stating are facts (because I know some people so scared to name the bank / entity that are doing bad things to them and I don't know why they so scared for what for telling the TRUTH???)
The banks cannot revise the spread (if it is sibor + spread) unless there is a market disruption clause, which is common in facility agreements of other asset class. But to invoke the market disruption clause would be very rare and difficult and I only saw it successful done for a German bank, during the Lehman crisis, and the borrower has no choice but to pay a higher financing cost.
Yes but we also know that Citibank had done that last year - unilaterally changed the spread!!! (It was reported in Chinese Newspaper if I didn't not remember wrongly)! And the only reason is to increase their profit and nothing else? 2015 is not Global Financial Crisis of 2008... :hopelessness:
Anyway I vote with my both hands and feet - I would not have any dealing with Citibank again, NEVER! :cheers1:
The banks cannot revise the spread (if it is sibor + spread) unless there is a market disruption clause, which is common in facility agreements of other asset class. But to invoke the market disruption clause would be very rare and difficult and I only saw it successful done for a German bank, during the Lehman crisis, and the borrower has no choice but to pay a higher financing cost.
Had not seen the loan agreement... Maybe they have squeeze in some clauses that gives them the reasons to do so....
Yes but we also know that Citibank had done that last year - unilaterally changed the spread!!! (It was reported in Chinese Newspaper if I didn't not remember wrongly)! And the only reason is to increase their profit and nothing else? 2015 is not Global Financial Crisis of 2008... :hopelessness:
Anyway I vote with my both hands and feet - I would not have any dealing with Citibank again, NEVER! :cheers1:
Yup, Citibank did it. See http://business.asiaone.com/news/borrowers-upset-over-hike-margin-sibor-loans.
Thanks for bringing to our attention the piece of news published by SPH Straits Times.
So, it seems to me that according to the article:
1) MAS made empty talk and refused to take any action?
"The Monetary Authority of Singapore (MAS) said it does not regulate the setting of interest rates but the banks must provide clear and relevant information on products and services, said a spokesman, adding that MAS has asked Citibank to review the customer feedback received."
So did MAS made any follow up to check whether Citibank take any satisfactory action after the feedback by Citibank's affected customers??? If they did, what has MAS done???
2) CASE also made empty talk and refused to take any concrete action to help?
"Mr Seah Seng Choon, executive director of the Consumers Association of Singapore, said: "We are of the view that the banks should justify such rate changes clearly to the affected consumers. Such changes will not be fair to consumers if there is no justification to do so.""
So now consumers unfairly bullied by Citibank, what has CASE done to help the affected consumers???
3) And Citibank's Mr Peng Chun Hsien, Citibank Singapore's head of secured finance solutions are giving "reasons" like:
a) "current revision is only applicable to clients outside the lock-in period".
b) Mr Peng told The Straits Times: "The word 'throughout' is a term the industry uses, and refers to the tenure and period that we are covering."
c) He added that affected customers had been given sufficient notice so that the process is transparent and they can opt to refinance their loans. Mr Peng noted that the overall rate is still fairly competitive.
d) Citibank said it undertook "careful consideration of factors including prevailing market conditions" before making the move.
To me, statement "(a)" made by Citibank's Mr Peng is IRRELEVANT because regardless of lock-in period or not, whatever changes Citibank made has to be according to the loan contract, not whether the loan is outside lock-in period or not. :topsy_turvy:
To me, statement "(b)" made by Citibank's Mr Peng is ILLOGICAL since if the word 'throughout' refers to the tenure and period that the loan covers, that mean actually Citibank has no right to change the fixed spread!!!
Again, statement "(c)" made by Citibank's Mr Peng is again IRRELEVANT because it doesn't matter whether Citibank's customers had been given sufficient notice or not because FACT is, if Citibank is not abidding by its side of the contract, the whole process "SMELLS"! (and not "transparent" as claimed by Mr Peng).
Again, statement "(d)" made by Citibank's Mr Peng is again IRRELEVANT because who cares what consideration they made before they don't abide by their side of the contract???
Look at the 4 statements (a) to (d) made by Citibank's Mr Peng to justify increasing the spread % and I cannot find anything that Mr Peng points to in the loan contract to justify increasing the spread. This does seem very SMELLY SMELLY indeed!!! Seems like Citibank does not have anything in the loan contract to backup their unilateral increase of the loan spread!!!!!!!!!!!!!! :cheers1:
So what are the truth? These statements according to ST are the truth:
i) "Finance industry experts say reviewing spreads is standard bank practice, but in practice, changing the spread during the loan period is uncommon. The Straits Times understands that banks such as United Overseas Bank and OCBC Bank have not increased the spreads. A DBS Bank spokesman said DBS and POSB have not varied spreads while under an existing agreement with customers. He said an 0.85 per cent spread used to be the market rate but some banks have lowered it to attract customers."
None of the banks, other than Citibank, had unilaterally hiked the spread (that is is supposed to be fixed according to the loan contract)!!!!!!!!!! :luke-and-darth:
Yup, Citibank did it. See http://business.asiaone.com/news/borrowers-upset-over-hike-margin-sibor-loans.
You can can read some discussions here (click on the link).......... (http://sgtalk.org/mybb/Thread-Hardwarezone-banks-changing-the-terms-of-existing-property-loan)
Some how, don't know why, the link to hardwarezone where was a lot of discussions is dead (despite the thread being just about 1+ year old)!!!!!!! Very strange indeed!!!!!!!!!!!! (http://forums.hardwarezone.com.sg/eat-drink-man-woman-16/breaking-banks-changing-terms-existing-property-loan-4984471.html)
Anyway, I read that 1 of the loan affected is the Citibank Home Saver Loan with SIBOR + 0.70% throughout the loan period (you can see the flyer attached here).........
Thanks for bringing to our attention the piece of news published by SPH Straits Times.
So, it seems to me that according to the article:
1) MAS made empty talk and refused to take any action?
"The Monetary Authority of Singapore (MAS) said it does not regulate the setting of interest rates but the banks must provide clear and relevant information on products and services, said a spokesman, adding that MAS has asked Citibank to review the customer feedback received."
So did MAS made any follow up to check whether Citibank take any satisfactory action after the feedback by Citibank's affected customers??? If they did, what has MAS done???
2) CASE also made empty talk and refused to take any concrete action to help?
"Mr Seah Seng Choon, executive director of the Consumers Association of Singapore, said: "We are of the view that the banks should justify such rate changes clearly to the affected consumers. Such changes will not be fair to consumers if there is no justification to do so.""
So now consumers unfairly bullied by Citibank, what has CASE done to help the affected consumers???
3) And Citibank's Mr Peng Chun Hsien, Citibank Singapore's head of secured finance solutions are giving "reasons" like:
a) "current revision is only applicable to clients outside the lock-in period".
b) Mr Peng told The Straits Times: "The word 'throughout' is a term the industry uses, and refers to the tenure and period that we are covering."
c) He added that affected customers had been given sufficient notice so that the process is transparent and they can opt to refinance their loans. Mr Peng noted that the overall rate is still fairly competitive.
d) Citibank said it undertook "careful consideration of factors including prevailing market conditions" before making the move.
To me, statement "(a)" made by Citibank's Mr Peng is IRRELEVANT because regardless of lock-in period or not, whatever changes Citibank made has to be according to the loan contract, not whether the loan is outside lock-in period or not. :topsy_turvy:
To me, statement "(b)" made by Citibank's Mr Peng is ILLOGICAL since if the word 'throughout' refers to the tenure and period that the loan covers, that mean actually Citibank has no right to change the fixed spread!!!
Again, statement "(c)" made by Citibank's Mr Peng is again IRRELEVANT because it doesn't matter whether Citibank's customers had been given sufficient notice or not because FACT is, if Citibank is not abidding by its side of the contract, the whole process "SMELLS"! (and not "transparent" as claimed by Mr Peng).
Again, statement "(d)" made by Citibank's Mr Peng is again IRRELEVANT because who cares what consideration they made before they don't abide by their side of the contract???
Look at the 4 statements (a) to (d) made by Citibank's Mr Peng to justify increasing the spread % and I cannot find anything that Mr Peng points to in the loan contract to justify increasing the spread. This does seem very SMELLY SMELLY indeed!!! Seems like Citibank does not have anything in the loan contract to backup their unilateral increase of the loan spread!!!!!!!!!!!!!! :cheers1:
So what are the truth? These statements according to ST are the truth:
i) "Finance industry experts say reviewing spreads is standard bank practice, but in practice, changing the spread during the loan period is uncommon. The Straits Times understands that banks such as United Overseas Bank and OCBC Bank have not increased the spreads. A DBS Bank spokesman said DBS and POSB have not varied spreads while under an existing agreement with customers. He said an 0.85 per cent spread used to be the market rate but some banks have lowered it to attract customers."
None of the banks, other than Citibank, had unilaterally hiked the spread (that is is supposed to be fixed according to the loan contract)!!!!!!!!!! :luke-and-darth:
The flyer said nothing about Citibank having the right to change the spread (which was fixed in number "+0.70%")!!! :hopelessness:
You can can read some discussions here (click on the link).......... (http://sgtalk.org/mybb/Thread-Hardwarezone-banks-changing-the-terms-of-existing-property-loan)
Some how, don't know why, the link to hardwarezone where was a lot of discussions is dead (despite the thread being just about 1+ year old)!!!!!!! Very strange indeed!!!!!!!!!!!! (http://forums.hardwarezone.com.sg/eat-drink-man-woman-16/breaking-banks-changing-terms-existing-property-loan-4984471.html)
Anyway, I read that 1 of the loan affected is the Citibank Home Saver Loan with SIBOR + 0.70% throughout the loan period (you can see the flyer attached here).........
Every contract from bank has the ultimate disclaimer.
Yes, but the main contract over-rides the disclaimer which cannot stand up to scrutiny under the fair consumer act.......... :topsy_turvy:
Every contract from bank has the ultimate disclaimer.
Now, the more important question is whether OCBC has just followed Citi and done the same. If the Board rates remain unchanged but the interest went up by 1%, then they have unilaterally adjusted the spread by 1%. This is far worse than Citi's adjustment of 0.2%.
MortgageGuru
26-04-16, 10:49
Now, the more important question is whether OCBC has just followed Citi and done the same. If the Board rates remain unchanged but the interest went up by 1%, then they have unilaterally adjusted the spread by 1%. This is far worse than Citi's adjustment of 0.2%.
Board rate increase, not the spread.
In board rate, the spread is actually the discount.
So for 1.28%, it will be 3.22% below BR.
The only fixed is 3.22%, or you may call it spread as well.
So basically, BR rise to 5.5 and thus derive the 2.28% payable.
Even if one takes a SIBOR based housing loan, the bank can also increase its margin. I know of a case where the bank informed the borrower that the rate increased from SIBOR+0.7% to SIBOR+0.9%.
To Pynchmail: can you name the bank that did this ? that it changed a promised *spread* over SIBOR ?
( Note this has nothing to do with the current TS's OCBC case. For "Board rate", bank can do whatever he wants. "Board Rate" is not a market reference rate, it is equivalent of some one writing a number on a blank piece of paper any time he wants, aka a blank cheque.)
Board rate increase, not the spread.
In board rate, the spread is actually the discount.
So for 1.28%, it will be 3.22% below BR.
The only fixed is 3.22%, or you may call it spread as well.
So basically, BR rise to 5.5 and thus derive the 2.28% payable.
You should educate your customers like this:
"Board Rate" is an arbitrary number set by the bank, at any time the bank wants, at any number he wants, in any way he wants.
"Board Rate" can , and will, change every day, even for the same project, submitted on the same day, even for the same buyer (of multiple units).
The so-call "discount over board rate" is completely meaningless and even moot. An unknown number ("board rate") minus a fixed number ("discount") is still an unknown number.
So mathematically, your rate today is an unknown number X - 3% = 1.28%. Tomorrow, I don't know. Since number X is not fixed and can be anything, the "3% discount" is completely meaningless. For example, tomorrow bank can say the X applicable to you is 10% so you pay 7% now.
Taking "Board Rate" is equivalent of you signing a blank cheque to the bank, and say to the bank "please, write whatever rate you want to charge me, and I will take it" !
Sorry to the TS, I just cannot believe, at this time and day, there are still people taking "board rates" ! Any other package, be it SIBOR, FHR, FDMR or something, etc are better.
Some board rates come with no lock-in and refinancing options.
For pre-TOP units, board rate still ok. Can slowly understand the market and switch when the time comes. The sums involved are also tiny.
You should educate your customers like this:
"Board Rate" is an arbitrary number set by the bank, at any time the bank wants, at any number he wants, in any way he wants.
"Board Rate" can , and will, change every day, even for the same project, submitted on the same day, even for the same buyer (of multiple units).
The so-call "discount over board rate" is completely meaningless and even moot. An unknown number ("board rate") minus a fixed number ("discount") is still an unknown number.
So mathematically, your rate today is an unknown number X - 3% = 1.28%. Tomorrow, I don't know. Since number X is not fixed and can be anything, the "3% discount" is completely meaningless. For example, tomorrow bank can say the X applicable to you is 10% so you pay 7% now.
Taking "Board Rate" is equivalent of you signing a blank cheque to the bank, and say to the bank "please, write whatever rate you want to charge me, and I will take it" !
Sorry to the TS, I just cannot believe, at this time and day, there are still people taking "board rates" ! Any other package, be it SIBOR, FHR, FDMR or something, etc are better.
For pre-TOP units, board rate still ok. Can slowly understand the market and switch when the time comes..
For pre-TOP deals, banks make more on cancellation charges when you go out. So banks have even more reason to force a high board rate on you since they know you have to take it since you will lose more if you go out, even when there is no lockin charges.
No, board rate is a no go under any condition.
But the bank will have Sibor linked and FD linked or even fixed rate when it's time to refinance or reprice. Can switch to more transparent rates then.
I have taken OCBC board rate before and they raised by 0.6%. When it's time, just switch to FDMR rates. No issue also. Unless FDMR rates move which is transparent.
For pre-TOP deals, banks make more on cancellation charges when you go out. So banks have even more reason to force a high board rate on you since they know you have to take it since you will lose more if you go out, even when there is no lockin charges.
No, board rate is a no go under any condition.
MortgageGuru
26-04-16, 15:06
Board rate is still fine to take up for BUC properties as they usually gives a pretty low margin for BUC and the cost involved are not much even if the interest rise before TOP.
Thereafter, then is the real world, just like after giving 2 years of your youth to national service.
No, if you are referring to "mortgage loan Board rate".
As many people have mentioned before, "Board rate" is a rate determined by the bank itself, and they can write any number, and your friend's "board rate" for his mortgage loan can be different from the "board rate" for your loan at the same time!
That is it! "Board rate" for loan 1 can be different for "Board rate" for loan 2 etc even for the same person taken from the same bank! The bank can just pen any number they like!
And don't check the bank's printed "Board rate" because they will claim that their published "Board rate" on their "board" is different from your "mortgage loan's Board rate"! :topsy_turvy:
Remember, the loan contract are different!
With board rate mortgage loan contract, it will be written like "Board rate - X%". The bank will not change the "-X%" but they can unilaterally change "Board rate" since the loan contract said they can do so!
With SIBOR or FDR pegged contract, it will be written as "SIBOR +X%" or "FDR +X%" and again the bank has no right to change the "+X%" (and Citibank having done that does not mean they have the right to do so! Somebody should just challenge them! Ask them to show which clause in the contract they based on to allow them to change the "X" number?). They can only change SIBOR or FDR.
With SIBOR, it is determined by a number of banks submitted to ABS/MAS.
With FDR, again it is unilaterally decided by the bank but they cannot run away with hiking it without increasing their costs of FD rate (so you have some safety in there that they can't anyhow jack up your FDR rate).
Whether you take SIBOR (which is more transparent - unless the banks and/or their employees work in cohort and try to rig it like LIBOR) or FDR (bank have to consider their FD costs before hiking it) will be up to your own assessment.
Now, the more important question is whether OCBC has just followed Citi and done the same. If the Board rates remain unchanged but the interest went up by 1%, then they have unilaterally adjusted the spread by 1%. This is far worse than Citi's adjustment of 0.2%.
MortgageGuru
26-04-16, 15:19
On a side note, citibank is offering 1.90% fixed 2 years and legal subsidy of $2000.
Citibank?
Ha ha ha! How to trust them like that when they can break their side of the signed contract and increase the fixed spread and still without telling their clients which "clause in the mortgage loan contract" they based on to increase the "X" number? As far as I can see, all the reasons they give to increase the "X" number (when questioned by the journalist) are either IRRELEVANT or "ILLOGICAL"! :smiley_simmons:
I will never have any dealing with Citibank regardless of whatever good deal they give now, since who knows, good deal will become "broken" deal later on (just like their SIBOR loan)???
Better stick with banks that are more honorable and will abide with the contract they signed!
On a side note, citibank is offering 1.90% fixed 2 years and legal subsidy of $2000.
MortgageGuru
26-04-16, 16:09
2 years is not a very long period a risk to clients, especially people who have intention to sell off in the near future.
To Pynchmail: can you name the bank that did this ? that it changed a promised *spread* over SIBOR ?
( Note this has nothing to do with the current TS's OCBC case. For "Board rate", bank can do whatever he wants. "Board Rate" is not a market reference rate, it is equivalent of some one writing a number on a blank piece of paper any time he wants, aka a blank cheque.)
Already named. See post #25 above.
I am surprised to learn that Board rate is specific to each loan. I thought each bank has one Board rate, hence they can say the Board rate has not changed for x years etc.
MortgageGuru
26-04-16, 16:46
I am surprised to learn that Board rate is specific to each loan. I thought each bank has one Board rate, hence they can say the Board rate has not changed for x years etc.
Generally it's one board rate at a time, so maybe 2015 board rate rise but 2014 did not. Something like this.
To Pynchmail : so it's just Citi. We all knew this on this board. As far as I know, no other bank has ever done this.
You must be very young. "each bank has one board rate" ? never. Even on the same project, sign on the same day with the same bank, you can have diff "board rates".
The applicable "board rate" to you can be changed any time. Whenever bank wants to raise bottom line, he will pick one batch and raise them, and tell you *your* board rate has changed.
I think you must have been confused because the bank publish a "Board Rate" on their e-notice board at the bank's branches and then tell you that your revised "Board Rate" is another higher number right?
Well, just remember: the bank's published "Board rate" on their e-notice board is different from your "mortgage loan's Board rate"!.
That was what I was told previously by the bank (years ago) and I am telling you now that you will get the same answer from the bank! :topsy_turvy:
I won't be surprised what they told you about "Board Rate" not having changed for many years is true because your "mortgage loan's Board Rate" always move up very fast when market interest rate goes up but barely drop when market interest rate falls drastically like a stone into the bottom of the ocean (and they only increase the "X" in "BR -X%" to entice and trap people into taking up board rate loans).............. :panda:
I am surprised to learn that Board rate is specific to each loan. I thought each bank has one Board rate, hence they can say the Board rate has not changed for x years etc.
I never like dealing with dishonorable people/entity, and I think you and the rest of the people should too to avoid getting burnt when they decide to turn their back with some irrelevant and illogical lame excuses.............
2 years is not a very long period a risk to clients, especially people who have intention to sell off in the near future.
Hi, I am referring to OCBC Bank.. What I am most pissed of is I received offer from OCBC for re-pricing my loan, where I switch to once again to Board package where my interest for the first year is 1.8% (5.1% Board rate -3.30%) . The Board rate on which I had taken loan was increased from 4.5% to 5.5%, when I asked bank on this question they informed me that they operate with multiple Board rate. This was shock for me that how such a large bank can operate with multiple Board Rate ? What are the norms from MAS and control for Bank to change this.. If any one has ideas please share with me....
Hi, I am referring to OCBC Bank.. The item which has pissed me off that Bank has multiple Boar Rate.. The Board rate on which I had taken loan was 4.5% when I had taken loan and now they have increased to 5.5% i.e 1% increase.. However, when I had checked for repricing they send me another option with Board rate where the 1 year interest was 1.8% (5.1% Board rate -3.3%). When I asked Bank how they have 2 different Board rate the response was we have multiple Board rate. This makes me feel how Bank can have multiple Board rate ? What is the governance on this ? Is any agency such as MAS reviews and monitor this ?
Why don't you ask for FMDR rate from OCBC? At least more transparent...
Hi, I am referring to OCBC Bank.. The item which has pissed me off that Bank has multiple Boar Rate.. The Board rate on which I had taken loan was 4.5% when I had taken loan and now they have increased to 5.5% i.e 1% increase.. However, when I had checked for repricing they send me another option with Board rate where the 1 year interest was 1.8% (5.1% Board rate -3.3%). When I asked Bank how they have 2 different Board rate the response was we have multiple Board rate. This makes me feel how Bank can have multiple Board rate ? What is the governance on this ? Is any agency such as MAS reviews and monitor this ?
..This makes me feel how Bank can have multiple Board rate ? What is the governance on this ? Is any agency such as MAS reviews and monitor this ?
... haiz...
of course bank can have multiple board rates.
this is banks' internal arbitrary rate. you signed on the dotted line agreeing bank setting this rate totally at bank's discretion. (See post #34). you have no grounds to protest.
MAS does not regulate how a bank sets its own price. It's free economy.
MAS only regulates how a COMMON rate like SIBOR/SOR is set (which is called a FIXING).
Ppl really don't appreciate how SIBOR packages came about: there was no SIBOR mortgage in the past, only board rate. Exactly because board rate was so arbitrary, leading many consumer complaints, DBS, serving as the "people's bank", was "forced" by MAS to offer SIBOR rates, thus changing the industry. MAS had done his part.
And yet if ppl still choose board rate, you must have done your calculations and taken your risks. you really have nothing to complain.
Or how about DBS May Day Special?
1% for 1st year (first 1mil) and FHR18 + 1.2% from second year?
I hope they have this promotion every May Day.
3 years lock in. What do you think
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