The fixed rate mortgages are sold at 1.68% per year.
UOB and HSBC have both started selling 3-year fixed rate mortgages at 1.68%.
According to RHB, this is the result of market doubts over further rate hikes by the US Federal Reserve.
Around 71% of forecasters now see an unchanged Federal funds rate (FFR) until the first month of 2018, along with the 1.1% appreciation in the EUR against the USD.
UOB's housing loan share of total loans is at 27.6%, followed by OCBC at 26.7%, and DBS at 21.1%.
This is likely UOB's attempt to capitalise on market expectations.
According to RHB analyst Leng Seng Choon, "Whilst one can argue that mortgages offer low lending yields, we believe they are of better asset quality and a positive – home mortgages’ NPL ratios are typically lower than business loans’, particularly during periods of economic stress."
However, RHB believes the impact on overall net interest margins (NIMs) is more important.
"Our sensitivity analysis shows that DBS is the key beneficiary of future rises in FFR. However, the current likely scenario appears to be less impending and fewer hikes in FFR and SIBOR. In addition, DBS has highlighted concerns relating to likely further provisions for its oil & gas loan portfolio," Choon added.
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