Property
Behind Fixed Deposit Home Loan Rates
By (The) Boring Investor  •  March 20, 2016
Fixed Deposit Home Rate (FHR) loans are loans with interest rates tied to fixed deposit interest rates. Recently, such loans have become quite popular among property owners looking to finance their properties. They like such loans because the interest rates are much more stable than those of the Singapore Interbank Offered Rate (SIBOR) loans. In addition, it is perceived that if banks were to raise the FHR rates, they would also incur higher interest costs for their source of funds, thus making such moves unlikely. However, is that really the case? Currently, the FHR loans available in the market are DBS' 18-month FHR and OCBC's 36-month FHR loans. The figure below shows the breakdown of bank deposits by maturity, using OCBC's latest financial statements, which have a more detailed breakdown of bank deposits than DBS'.
Fig. 1: Bank Deposits by Maturity
As shown above, a great majority of bank deposits ......
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By (The) Boring Investor
nvestor, Engineer, Photographer, Blogger, Friend and Son.
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