A large crowd of prospective buyers at The Clement Canopy showflat. (Photo: UOL Group)
DBS Bank and United Overseas Bank (UOB) are offering mortgages with zero percent spread to compete for the chance to fund the purchase of a minimum of 1,225 homes in this year’s first two property launches, reported the Business Times.
DBS’ special-promo is based on the 18-month fixed-deposit home-loan rate (FHR), while the benchmark for UOB is the 36-month FHR. As the current rates are 0.6 percent and 0.65 percent respectively, these are the effective lending rates until the project obtains its temporary occupation permit (TOP), which is usually in three to four years. Thereafter, DBS will charge a one percent spread for its loan, while UOB’s spread is 0.9 percent for the first year after TOP and 0.95 percent subsequently.
Based on a $1 million loan with a 25-year tenure, the amount to be repaid for a DBS loan at FHR + zero percent ranges from $5,193 to $5,947 per annum, but after TOP at FHR + one percent, it amounts to $19,207 for the fifth year.
According to some experts, banks offering such housing loans are suffering a loss, unless they can cross-sell other financial products, like mortgage insurance. While there is no lock-in period, this type of housing loan only applies to developments under construction and comes with one-time free conversion for a limited time only. The promo from DBS ends next Monday (6 March), while UOB is believed to be mulling over the expiry date.
This means there is enough time to take advantage of the offer to buy a unit at the two projects. In fact, DBS and UOB personnel were present last weekend during the launch of the 505-unit Clement Canopy condominium. They are also expected to be on hand at the launch of the 720-unit Grandeur Park Residences this weekend.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email email@example.com