Monday, May 21, 2007

New home loans tied to SOR

Standard Chartered moves ahead in booming market

Christie Loh
[email protected]

With the property market booming and financing getting cheaper, Standard Chartered Bank is moving aggressively in Singapore's mortgage space.

Over the past week alone, the foreign lender has launched two home loans pegged to interest rates that are publicly available. Stanchart's latest offer, announced yesterday, is a mortgage tied to the three-month Singapore dollar swap offer rate (SOR), which moves according to market conditions.

Basically, a homebuyer pays an agreed percentage above the variable SOR for a specified time period. He benefits when SOR falls and vice versa.

While OCBC had launched a similar product in February, Stanchart's differs in that it caps the SOR used to determine the loan rate for the first two years, an industry first here (see box).

Identical principles guided Stanchart when it introduced a mortgage linked to the three-month Singapore Interbank Offered Rate (Sibor) last Friday. Sibor, which is the rate at which banks lend to each other, has slid over recent months to reach a 20-month low of 2.38 per cent last week. This is good news for foreign banks, which traditionally depend heavily on the interbank market for funds.

But foreign lenders are also trying to reel in the deposits.

Yesterday , HSBC launched Singapore's first online deposit for consumers to transact in up to 10 currencies in a single account.

The Multi-Currency Account offers the highest annual interest rates here for Singapore- dollar and US-dollar deposits at 2 per cent for savings below $50,000 and 4.2 per cent for savings above US$100,000 respectively, HSBC said.