We thank Mr Lim Howe Foong for his feedback (Review policy of pegging HDB housing loan interest rate to CPF rate, July 22).

The Housing Board obtains its mortgage loan funding from the Government at the Central Provident Fund (CPF) Ordinary Account (OA) interest rate. The interest rate for HDB's concessionary loan is pegged at 0.1 per cent above the prevailing CPF interest rate to cover HDB's cost of loan administration.

It is reviewed quarterly, in line with the CPF interest rate. This has provided HDB mortgagors with stability and certainty over the long term.

On the other hand, the interest rates of commercial home loan packages are determined by financial institutions based on their respective business strategies, market conditions and commercial decisions. Thus, these rates are more susceptible to market fluctuations.

HDB flat buyers can choose between taking up an HDB concessionary loan or a bank loan at the point of buying their flat. Those who take up an HDB loan can choose to later refinance with a bank loan.

We advise flat buyers to study their options carefully and decide on a loan package that best suits their needs over the long term.

HDB has various assistance measures in place for flat owners who require assistance with servicing their HDB loans.

These include allowing flat owners to reduce or defer their loan instalments temporarily, or to pay their loan arrears by instalments till their financial situation improves. If needed, we may also allow flat owners to extend their mortgage loan tenure to help reduce their monthly instalments.

Flat owners who need assistance can contact us on 1800-225-5432 or make an appointment with our HDB branches via the HDB InfoWeb (www.hdb.gov.sg/branch).

Norman Chee Wei Kiong

Director (Housing Finance)

Housing Board