It is available for all loan types such as completed properties and properties under construction.
OCBC Bank is launching a new SORA-based home loan referencing the three-month Compounded Singapore Overnight Rate Average (SORA) published by the Monetary Authority of Singapore (MAS), a press release revealed.
This follows after the bank released its first SORA-based home loan last July. Interest rates for this loan were based on an average of the daily SORA rates in the preceding 90 calendar days. In the first two weeks of its launch, more than $50m of such loans were approved.
With the launch of the new OCBC three-month compounded SORA home loan package, the OCBC 90-Day SORA (Simple Average) home loan package will no longer be offered.
Customers of the new home loan will benefit from the availability of the Compounded SORA rates that MAS has started to publish since 5 August, which provides users with a transparent and convenient reference to track their loan rates, the press release stated.
It is available for all loan types such as completed properties, properties under construction, new home loans and repricing of existing home loans. The package has a two-year lock-in period, which means customers can choose to switch to another home loan package. Customers would be able to make pre-payments of up to 50% of the loan amount in the first two years with no penalty.
“We received a positive response to the industry’s first retail SORA-pegged home loan that was launched last month with more than $50m in loans approved in its first two weeks of launch. This shows that consumers are receptive to SORA as the new interest rate benchmark for SGD markets,” Sunny Quek, head of consumer financial services at OCBC Bank.
In addition, the OCBC 3-month compounded SORA package will reference the three-month compounded SORA rate to compute the monthly loan instalment. The rate will be updated every month instead of every three months as is the case for the three-month SIBOR-based home loan.
For each subsequent one-month period, the applicable three-month compounded SORA will be the rate published by MAS on the first day of the one-month period (rate review date) and will apply for such subsequent one-month period. If the three-month Compounded SORA is zero or less, zero will be applied.
This is said to provide certainty to the customer as the customer will be notified at the start of the month of the applicable interest rate and instalment amount that will be charged at the end of the month.
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