Mention DBS bank to any Singaporean and they’ll automatically think of the convenience withdrawing cash, the long queues at ATMs, and their acquisition of POSB. It’s common knowledge that DBS is at the forefront of our local banking scene. But how do DBS home loans measure up?
At present, DBS offers only two types of home loans worth noting:
DBS 3M SORA and FHR6 home loans
| Package | Interest | Lock-in period | ||
| Breakdown | Average for 1st 5 years | |||
| 2 Year Lock-In 3M SORA | Year 1-2: 3M SORA + 1.00% pa
Thereafter: 3M SORA + 1.00% pa |
2.065% (subject to SORA fluctuations) |
2 years | |
| 2 Year Lock-In FHR6
|
Year 1-2: FHR6 + 1.3% pa
Thereafter: FHR6 + 1.3% pa |
2.7% (subject to FHR6 fluctuations) |
2 years | |
| No Lock-In FHR6
|
Year 1-5: FHR6 + 1.75% pa
Thereafter: FHR6 + 1.75% pa |
3.15% (subject to FHR6 fluctuations) |
– | |
*3M SORA as at Oct 2022 is 2.065%. FHR6 as at Oct 2022 is 1.4%.
Fixed deposit home loans
Currently, DBS’s fixed deposit home loans are pegged to the fixed deposit interest rate they’re giving for amounts within $1,000 and $9,999 deposited for 6 months.
FHR6 is the best option since it gives you the lowest interest rates. DBS previously offered FHR8 and FHR18 packages (which meant higher interest rates for you) because banks would naturally offer higher rates for you to deposit your money with them longer.
Way back in November 2017, DBS’ FHR rates were:
- FHR8: 0.20%
- FHR9 0.25%
- FHR18 0.6%
Now, DBS’s FHR6 is currently at 1.4%.
If you’re thinking of getting a fixed rate for your new home because you’re worried about the instability of the rates, DBS’s Fixed Deposit-linked rates for HDBs are actually relatively stable, since their spread is kept constant throughout.
The only thing you’ll need to worry about is DBS’s FHR rates increasing.
In the past, due to the nature of fixed-deposit rates, chances of this happening was rather… low. Since an increase in the FHR rates would mean the DBS would have to pay a higher interest out to their fixed deposit account holders too.
However, in the economic climate that we live in today, interest rates are increasing rapidly.
Fixed rate home loan
As at 23 September 2022, DBS removed its fixed home loan packages in response to the Fed interest rate hike. Later, DBS reintroduced its fixed home loans at a higher rate of 3.5%.
| DBS Fixed Rate Home Loan | Interest Rate | Minimum Loan |
| 2 Year Fixed | Year 1-2: 3.5% Year 3 on: 3M SORA + 1% |
$100,000 |
| 3 Year Fixed | Year 1-2: 3.5% Year 3 on: 3M SORA + 1% |
$100,000 |
| 4 Year Fixed | Year 1-2: 3.5% Year 3 on: 3M SORA + 1% |
$100,000 |
It’s not uncommon for fixed packages to be priced higher than their fixed deposit linked counterparts since they are fixed packages (the banks will have to price it higher to counter potential interest hikes in future, and it pays for assurance).
So, say you’ve just bought a resale 4-room at Clementi for $800k
Your loan amount is $600,000 (assuming you’re able to get the full 75% of your purchase price), with a loan tenure of 25 years.
According to DBS’s monthly repayment calculator, here’s how much you’ll have to pay:
| Package | Interest | Lock-in period | ||
| Breakdown | Monthly Payment | |||
| Fixed Rate | Year 1-2: 3.5% Year 3 on: 3M SORA + 1% |
$3,004 | 2 to 4 years | |
| 2 Year Lock-In 3M SORA | Year 1-2: 3M SORA + 1.00% pa
3.065% |
$2,864 | 2 years | |
| 2 Year Lock-In FHR6
|
Year 1-2: FHR6 + 1.3% pa
2.7% |
$2,753 | 2 years | |
| No Lock-In FHR6
|
Year 1-5: FHR6 + 1.75% pa
3.15% |
$2,892 | – | |
Obviously, the DBS Home Loan option with the cheapest interest rate right now is the 2 year lock-in 3M SORA floating interest rate package.
If you were buying a cosy condo at Choa Chu Kang for $1,000,000
Your loan amount is $750,00 (assuming you’re able to get the full 75% of your purchase price), with a loan tenure of 25 years.
According to DBS’s monthly repayment calculator, here’s how much you’ll have to pay:
| Package | Interest | Lock-in period | ||
| Breakdown | Monthly Payment | |||
| Fixed Rate | Year 1-2: 3.5% Year 3 on: 3M SORA + 1% |
$3,755 | 2 to 4 years | |
| 2 Year Lock-In 3M SORA | Year 1-2: 3M SORA + 1.00% pa
3.065% |
$3,580 | 2 years | |
| 2 Year Lock-In FHR6
|
Year 1-2: FHR6 + 1.3% pa
2.7% |
$3,441 | 2 years | |
| No Lock-In FHR6
|
Year 1-5: FHR6 + 1.75% pa
3.15% |
$3,615 | – | |
Obviously, the DBS Home Loan option with the cheapest interest rate right now is the 2 year lock-in 3M SORA floating interest rate package.
DBS fixed home loan is higher, but only would make sense is if you were buying a property in hopes of flipping profits. Because you’d have a choice of selecting the number of years your lock-in period entails.
Essentially, with DBS’s fixed rate packages, the amount of years you’re guaranteed a fixed rate is the same amount yrs you’d get in your lock-in period. And if you were to sell your property and prepay your loan before the lock-in period ends, a fee of 1.5% your outstanding loan amount will be incurred.
Of course, besides comparing interest rates, there are many more factors that goes into finalising a home loan package that works best for you. Aside from looking at the lock-in period, you’d also want to keep a lookout for other factors such as interest review dates ,breakage fees, legal and valuation costs of refinancing/repricing etc in the contract.
What are your thoughts on DBS home loan offerings? Let us know!