CPF interest rates, HDB mortgage rate to remain unchanged in third quarter of 2016

The CPF Building in Tampines Central.
The CPF Building in Tampines Central. PHOTO: ST FILE

SINGAPORE - All Central Provident Fund (CPF) members will continue to receive at least 2.5 per cent interest on their Ordinary Accounts (OA), and 4 per cent interest on their Special, Medisave and Retirement Accounts from July 1 to Sept 30, the CPF Board announced on Wednesday (May 18).

Correspondingly, the concessionary interest rate for HDB mortgage loans, pegged at 0.1 per cent above the OA interest rate, will remain unchanged at 2.6 per cent over the same period.

The CPF Board said that the OA interest rate will be maintained at the minimum amount of 2.5 per cent as the computed rate of 0.24 per cent - derived from the three-month average of major local banks' interest rates from February to April this year - is lower than the legislated minimum interest rate.

OA monies earn either the legislated minimum interest of 2.5 per cent per annum or the computed rate, whichever is higher. The rate is adjusted quarterly.

Similarly, the interest rates for Special and Medisave accounts will stay at the floor rate of 4 per cent, as the computed rate of 3.43 per cent is lower.

The computed rate is derived from the 12-month average yield of 10-year Singapore Government Securities (2.43 per cent from May 2015 to April 2016) plus 1 per cent.

CPF members aged 55 and above will also earn an additional 1 percentage point of interest on the first $30,000 of the combined balances in their Special, Retirement and Ordinary Accounts, of which up to $20,000 can be from the OA.

This is paid over and above the current extra 1 per cent interest earned on the first $60,000 of their combined balances.