A fierce home loans battle among the local banks has intensified, with OCBC Bank joining the fray with a tempting new mortgage offer.
The package, rolled out on Saturday, is pegged to the bank's variable internal rate, or board rate. Many mortgages are pegged to publicly set benchmarks, such as the Singapore Interbank Offered Rate.
OCBC's latest offer works out to 0.7 per cent for the first year, 0.65 per cent for the second year, 0.60 per cent for the third year and 0.55 per cent for the fourth. After that, the rates are 1.55 per cent a year.
These rates are comparable to deals offered by DBS Bank and United Overseas Bank a week ago, when the other two lenders launched zero-spread fixed-deposit home loan rate packages with effective rates as low as 0.6 per cent a year.
A spread refers to the margin of loans that a bank adjusts for yield. In this case, DBS and UOB are not charging anything on top of their fixed-deposit home loan rates.
All three packages are temporary offers, aimed at buyers of projects that are under construction - including those looking at new launches such as The Clement Canopy and Grandeur Park Residences, where about 1,220 new homes are being built.
There definitely is a price war between the banks at this moment. Now OCBC has thrown its hat into the ring as well, with its new package an obvious reaction to DBS and UOB.
MONEYSMART.SG MORTGAGE HEAD DAVID BAEY, on the mortgage offers.
DBS' offer has expired, while the other two are still available.
MoneySmart.sg mortgage head David Baey believes that the three offers are aimed at buyers of the new launches.
"There definitely is a price war between the banks at this moment. Now OCBC has thrown its hat into the ring as well, with its new package an obvious reaction to DBS and UOB," he told The Straits Times.
"In recent years, there have not been many new property launches ..., so the three banks are pricing very aggressively in order to capture the mortgages for these launches."
A UOB spokesman said it has seen strong interest in its package over the last two weekends, while DBS said the response to its offer had been good.
While these offers are enticing, home buyers still need to consider the fine print. Those interested in a board-rate loan package, for instance, should be aware that banks can change their internal rates at any time with 30 days' notice. The OCBC package also requires a four-year lock-in period.
Buyers should also take note of when their properties get a temporary occupation permit (TOP).
"The packages by DBS and UOB will no longer be at 0 per cent spread after TOP. If TOP comes faster, you will not enjoy as much saving as you expect," Mr Baey said.