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Thread: HSBC home loan rewards loyalty

  1. #1
    mr funny is offline Any complaints please PM me
    Join Date
    May 2006

    Default HSBC home loan rewards loyalty,00.html?

    Published March 12, 2009

    HSBC home loan rewards loyalty

    Rate keeps sliding for long-haul customers in face of refinancing war


    (SINGAPORE) HSBC has just come up with a ***y mortgage deal in a bid to keep its customers - on the condition that borrowers park at least $100,000 at the bank.

    Borrowers who stay with the bank for 10 years exactly see their first-year spread of 1.5 percentage points - that is the margin they pay on top of the three-month Sibor rate - slide and eventually disappear in the 10th year. Thereafter, the spread jacks up back to 1.2-points.

    Sibor is the interbank or wholesale rate and Sibor-plus packages are popular with borrowers betting that this will remain low as governments pump money into the banking system to tackle the global recession.

    A home loan war is looming with HSBC's offer hot on the heels of other initiatives. Last week, Maybank announced the lowest three-year fixed-rate deal in town.

    Some bankers claim that hardly anyone sticks to a bank for 10 years, with three years the norm before fickle borrowers are tempted away.

    HSBC said that those who stay will enjoy a steady year-on-year decreasing interest rate spread.

    The spread for the first year starts at 1.5 points on top of the three-month Sibor. This is reduced by 0.075 of a point at the end of each anniversary year.

    If customers keep their loans, their spread falls to zero in the 10th year.

    The loyalty discount works only if customers deposit a minimum $100,000 of assets such as deposits or investments and insurance with HSBC.

    After the 10th year, the interest rate spread goes back up to 1.2 points for the remaining tenure of the home loan.

    There is no lock-in period so borrowers have full flexibility, said HSBC.

    Over 10 years, HSBC customers pay an average of 1.08 per cent while it's an average of 1.425 per cent over the first three years, noted United Overseas Bank head of loans Kevin Lam.

    He said that UOB has a fixed-rate three-year loan where it charges the cost of funds plus a 1.25-point spread for borrowers whose loan to value ratio is 80 per cent. For no lock-in, the spread is currently 1.75 points.

    Mr Lam noted that for 'safe' borrowers, that is those whose loan to value ratio is low - say 50-60 per cent - UOB is willing to charge a lower spread.

    Loan to value ratio refers to the loan quantum versus the value of the property and with property prices still sliding, banks will reward customers who borrow less.

    DBS Bank too has loyalty Sibor-plus packages with the spread sliding up to three years.

    Under its package, customers financing loans of 60 per cent or less of valuation can enjoy a spread which starts at 1.1 points for the first year and falls to as low as 0.8-point in the third year. Thereafter, the spread is 1.25 points.

    This applies only to completed owner-occupied properties.

    'When customers commit a longer period with us, the interest rate spread is also reduced,' said a DBS spokesman. 'This loyalty reward is still available to this day and available for three and 12-month (Sibor) packages for customers, including those new to our bank.'

    In these recessionary times, borrowers still have some options as banks try to outwit one another to sell their loans and, to give it credit, HSBC was the first to launch loyalty loan packages, keeping rivals on their toes.

    Last July, HSBC unveiled its innovative Sibor plus loyalty offer with year-on-year decreasing spread for the first three years of the loan.

  2. #2
    mr funny is offline Any complaints please PM me
    Join Date
    May 2006


    March 12, 2009 Thursday

    HSBC's new home loan offers 'loyalty discount'

    Borrowers enjoy interest rate spread that decreases every year for 10 years

    By Gabriel Chen

    HSBC has unveiled a new home loan pegged to the Singapore Interbank Offered Rate (Sibor) that rewards longer-term borrowers with an interest rate that gets increasingly competitive over time.

    Its new loan package sees the interest rate charged on top of the three-month Sibor - the rate at which banks lend cash to each other - trimmed each year.

    Typically, loans pegged to the Sibor have either flat or increasing interest rate spreads.

    The new product follows HSBC's launch last year of a similar package, which cut the interest rate spread at the end of every anniversary year, up to the third year of the loan.

    For its new 'loyalty package', HSBC customers will see a year-on-year decrease in the interest spread until the 10th year, when it will hit zero.

    During the first year, borrowers will pay an interest rate spread of 1.5 per cent above the three-month Sibor.

    The spread is then reduced by 0.075 percentage point at the end of each anniversary year.

    HSBC has made the arrangement even sweeter for its Premier customers whose interest rate spread will be cut by 0.1 percentage point at the end of each anniversary year.

    In the 10th year of the loan, the interest rate spread will be reduced to zero for all customers.

    Thereafter, the rate reverts to Sibor plus 1.2 per cent for the remaining tenure of the home loan.

    Mr Sebastian Arcuri, head of personal financial services at HSBC Singapore, said the response to its earlier Sibor-pegged loyalty package had been 'extremely positive'.

    'In giving customers a loyalty discount on the interest rate spread for their Sibor-pegged home loan, we want to help them maximise the value of their relationships with us,' he said.

    But observers caution that home buyers must do their homework before choosing HSBC's latest mortgage.

    First, Sibor can be volatile and those looking for fixed cash flow and protection against interest rate movements should opt for fixed-rate packages.

    'If Sibor starts to exhibit volatility down the road again, these lower spreads might not mean much to customers,' said Mr Geoffrey Ying, head of the mortgage division at financial advisory firm New Independent.

    A DBS Bank spokesman said: 'In selecting the package, customers need to consider how the rates are determined and how stable they are.

    'A three-month package would require one to actively monitor the interest rate environment and review the loan structure regularly.'

    Next, customers should average out the interest rate spreads over 10 years and see how the savings compare to other offers.

    'There is no free lunch,' said United Overseas Bank's head of loans Kevin Lam. 'The package is effectively a lock-in because you need to stay long enough to enjoy the zero (interest spread).'

    HSBC said that to enjoy its new home loan, customers must have an average annual balance of $100,000 or more. It added that there was no lock-in period for the loan.

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  3. #3
    Join Date
    Nov 2008


    HSBC think we are idiot. If HSBC dare to introduce me this package, i will xxxx that banker.

  4. #4
    Join Date
    Mar 2008


    Quote Originally Posted by isaaclim
    HSBC think we are idiot. If HSBC dare to introduce me this package, i will xxxx that banker.
    Haha... good one, agree.
    Heard SCB will be coming out with something? Refinancing war starting ???

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