Considering an OCBC home loan for your upcoming property or thinking of refinancing to one? Then this guide’s for you.
First things first, a quick introduction to OCBC: Formed in 1932, OCBC is the second largest bank in Southeast Asia by assets today. While no one in Singapore really needs an introduction to the bank, it’s safe to say that OCBC has also made its mark globally. OCBC has consistently ranked amongst the top 50 Safest Banks in the world by Global Financial Magazine and was recently named the Best Managed bank during COVID-19 by the Asian Banker.
Now, what’s happening in the market: In November 2022, the US Fed raised interest rates by another 75 basis points; the federal funds rate to is now in the range of 3.75% to 4%. In response to rising interest rates, major banks in Singapore, including OCBC, have raised their mortgage rates.
In this article, we’ll take a look at the home loan packages offered by OCBC for both HDB and private property owners. These include fixed rate and floating rate mortgages.
Disclaimer: The mortgage packages mentioned in this article are correct at the time of writing (17 November 2022) and are meant as a guide only. The interest rates are subject to change, and you should compare the latest home loan rates and packages on PropertyGuru Finance before applying for a new home loan.
OCBC Home Loan Summary
|OCBC home loan summary||Type of home loan|
|BUC home loans||OCBC No Lock (3M SORA) floating rate BUC package|
|Floating rate home loans||OCBC 2-Year (3M SORA) floating rate package|
|Fixed rate home loans||OCBC 1-Year and 2-Year fixed rate package|
For all of OCBC’s home loan packages, there is a minimum loan sum requirement of $200,000 for HDB flats and $300,000 for private properties.
OCBC Fixed Rate Home Loan Packages
On 15 November 2022, OCBC raised its fixed rate home loan packages. Currently, OCBC allows homeowners to choose between a 1-year and 2-year fixed rate package at 4.3%.
Fixed rates protect you from rate fluctuations for a period of time. Those who are risk averse (especially amid the current rising interest rates) may appreciate such stability. For the benefit of having this certainty in your monthly mortgage repayments, you typically would have to fork out a slightly higher interest rate compared to floating rate packages.
For the fixed rate packages, the bank offers a one-time free switch after the lock-in period.
Paul Wee, Vice President – PropertyGuru Finance, PropertyGuru, explains, "Many banks in Singapore have withdrawn fixed packages given the steadily rising interest rates. We expect banks to continue monitoring these packages closely and replace them with fixed-rate packages with higher rates, as and when there are significant movements in the reference rates. The likelihood of banks withdrawing fixed-rate packages altogether also increases significantly when interest rates become too volatile."
OCBC Floating Rate Home Loan Packages
At the moment, OCBC offers a 2-year floating rate home loan package, pegged to the Singapore Overnight Rate Average (SORA).
|Year||OCBC 2-Year (3M SORA) floating rate|
|Year 1||3M Compound SORA + 0.80%|
|Year 2||3M Compound SORA + 0.85%|
|Year 3||3M Compound SORA + 1.00%|
|Thereafter||3M Compound SORA + 1.00%|
The SORA is the “volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore between 8am and 6.15pm”.
As its name suggests, floating rates fluctuate according to their reference rates. This means that when the reference rates increase or decrease, homeowners would see their mortgage repayments moving accordingly. This is unlike those who choose fixed rate packages – who are sheltered from interest rate increases but also do not enjoy any possibility for lower rates (during the lock-in period).
Regarding floating-rate packages, Paul mentions: "Based on expectations of the three-month-compounded SORA rates hitting 2.50% and assuming a fixed spread of 0.8% (which is determined by the banks), we can potentially be looking at a net rate of 3.3% for floating-rate packages in the next few months."
For the OCBC floating rate package, there is a one-time free switch offered after 12 months from the date. You are also able to make a partial repayment of up to 50% of the initial loan amount (within the lock-in period, subject to one-month notice).
OCBC BUC Home Loans (For Residential Properties Under Construction)
For under-construction properties, you can choose a BUC home loan pegged to the three-month SORA. Current rates (as of 17 November 2022), according to the PropertyGuru mortgage comparison tool:
|Year||OCBC 3M SORA BUC package interest rate|
|Year 1||3M SORA + 0.80%|
|Year 2||3M SORA + 0.85%|
|Thereafter||3M SORA + 1.00%|
Both BUC packages apply to HDB and private properties and have no lock-in period. They also come with perks such as allowing partial prepayment, waiver due to sales, and one free package conversion.
OCBC Home Loan Review: Should You Consider It?
Other than the interest rates of the loan packages, there are other factors that should be taken into consideration before taking up your home loan. Here are some of the attractive considerations when taking up an OCBC home loan.
Free conversions are always welcome, especially during uncertain times when interest rates are fluctuating. Many OCBC packages currently offer this perk for new loans only.
Prepayment Of Up To 50% Of Loan Amount During the Lock-In Period
For both of its floating rate packages, there is no prepayment penalty for up to 50% of the loan amount in the first two years. The offered flexibility allows homeowners and/or investors looking to take advantage of the competitive interest rates as a cheap funding source or having a need to sell off their properties during the lock-in period.
Reputable Bank in Singapore
As mentioned at the start of this article, OCBC is a world-famous bank with many accolades to its name and a 90-year track record. If the reputation of the bank matters to you and/or if you have a personal preference for a local lender, OCBC is definitely worth considering.
You can review the details of OCBC’s various home loan packages on PropertyGuru Finance, as well as compare rates from major banks in Singapore to enjoy the best home loan rates.Chat with us on Whatsapp Fill up an online form
Disclaimer: The information is provided for general information only. PropertyGuru Pte Ltd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.