Maybank makes fixed-rate mortgages cheaper

Source : Straits Times - 6 Mar 2009

MAYBANK aims to counter the rising popularity of floating-rate home loans by making its fixed-rate loans cheaper.

It has cut rates on its three-year fixed-rate package, it said yesterday.

Home owners will now pay 1.6 per cent for the first year, 2.2 per cent for the second, 2.9 per cent for the third and 3.75 per cent thereafter.

The final rate is the bank’s board rate and subject to change, but Maybank said it has not been adjusted since it was implemented in February 2007.

Previously, the package charged 3.58 per cent in each of the first three years and 3.75 per cent thereafter.

Although the promotion is being advertised as a refinancing package, Maybank said the special rates are also open to new home buyers, and apply to both HDB flats and private properties.

But there are some conditions: The loans cannot be for more than 70 per cent of the property’s purchase price, and the rates apply only to completed homes that are owner-occupied.

Maybank’s move comes as more people turn to floating-rate loans pegged to transparent indicators such as the Singapore Interbank Offered Rate (Sibor) and the Swap Offer Rate (SOR).

These rates have plunged recently, making floating-rate loans more attractive. Sibor touched 0.68 per cent last month. With a mark-up of 1.25 percentage points - as in one package offered by HSBC Bank - a Sibor-pegged mortgage rate would come up to 1.93 per cent.

An HSBC spokesman said yesterday that most of its home loan clients opt for Sibor-pegged packages as ‘they like the transparency these loans offer’.

Maybank does not offer Sibor-pegged loans, though it has floating-rate loans.

Its consumer banking head Helen Neo said Sibor is already close to 10-year lows and there is no guarantee it will continue the downward trend. She noted that rates can fluctuate by as much as 3per cent over three-year periods.

She said: ‘We are confident people will welcome the peace of mind that fixed-rate packages can offer, particularly in times of such volatility.’