UOB, HSBC lock horns with DBS on a mortgage fight in Singapore

HSBC and UOB launched their three-year fixed-rate home loan packages, spurring a competition with Singapore's largest housing-loan provider DBS.

DBS Group
DBS Group. Reuters

Singapore's biggest banks have commenced competition in the area of mortgage loans, sparked by the offering of lower interest rate for a longer duration to attract a slew of home buyers who are starting to gain interest again in the residential market.

According to a report from the Business Times, UOB and HSBC unveiled their three-year fixed-rate home loan packages recently, challenging DBS which has been Singapore's largest housing-loan provider. The Bank of China also has its three-year fixed-rate package albeit with varying annual interest rates.

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In May this year, DBS Chief Executive Piyush Gupta said last May that no bank in the market is able to match its home-loan package.

Much to its surprise, UOB and HSBC have joined it in selling three-year fixed-rate packages of 1.68 per cent for each of the three years. The said banks are capitalising on the recent slip in interest rates as doubts of further rate hikes by the US Fed rise.

To recall, the three-month Singapore interbank offered rate has already slipped at 1.12283 percent, down from a year high of 1.13717 percent which was seen in July.

The report noted that HSBC re-entered the mortgage scene in Singapore with an attractive two-year fixed-rate home loan at 1.52 per cent annually last month.

HSBC Bank Head of Customer Value Management Matthias Dekan told the report that this led the bank to offer its current home loan.

"Given this environment, customers prefer fixed-rate mortgage packages as they allow home owners to lock in the interest rate for the first two to three years of their loan tenure," Dekan was quoted saying.

Meanwhile, a spokesperson from UOB noted that the group's home-loan packages are crafted to suit the needs of their customers.

"For example, fixed-rate packages offer customers certainty and assurance that their monthly repayment amount will not be affected by market movements," the representative said.

It is important to note, however, that OCBC, the second largest bank in Singapore, is still missing in the three-year fixed-rate space. Currently, it has a two-year fixed-rate package with a 2.38 percent interest rate.