CIMB Bank will maintain the floor rate for its mortgages pegged to the Singapore inter-bank offered rate (Sibor) and swap offer rate (SOR) after customers' pushback against a planned hike.
The bank said on Wednesday that it will reduce its deposit rates and cost of deposits, and this will allow the bank to maintain its floor rate at 0.1 per cent for all its existing consumer mortgage loans pegged to the applicable one-month and three-month Sibor and three-month SOR.
The Straits Times reported on Monday that a group of 25 customers had banded together to fight the bank's initial decision to raise the floor rate of certain mortgages tied to the Sibor and SOR to 0.9 per cent, from 0.1 per cent, on Jan 1 next year.
The group, which has grown to more than a 100, had set up a website to raise awareness of the hike.
Members had also written to the Monetary Authority of Singapore, the Consumers Association of Singapore and the Financial Industry Disputes Resolution Centre.
The bank had originally wanted to implement the hike on May 18, but postponed the plan because of irate customers.
CIMB chief executive Victor Lee said: "We thank our customers for their feedback, and we sincerely apologise for the inconvenience caused."
He added: "We factored in that the market's cost of deposits has fallen, hence allowing us to lower our deposit rates and cost of deposits so that we can maintain our floor rate at 0.1 per cent."
The bank will also offer its affected customers either a two-year fixed rate package of 0.9 per cent or a three-year fixed rate loan package of 1.1 per cent for a limited time, in order to mitigate the fluctuations of the current volatile interest rate environment, Mr Lee said.
"This will give our customers peace of mind for the next three years, allowing them to plan their finances accordingly for the immediate three years," he added.
A spokesman for the consumer group said in response to the bank's move to scrap the hike: "We accept CIMB's apology. Home ownership is not possible without fair and honest mortgages.
"We look forward to CIMB reviewing its terms and conditions to ensure that this is the case. Our website HonestMortgages.sg will remain accessible as a learning point for consumers, going forward."