SINGAPORE: As interest rates for home loans rise, more flat buyers are borrowing from the Housing and Development Board rather than banks to finance their homes.
At least one buyer must be a Singapore citizen, and applicants must not have taken two or more housing loans from HDB before. There are also restrictions based on the home buyers’ ownership of other properties.The current HDB concessionary loan is pegged at 0.1 per cent above the Central Provident Board Ordinary Account rate. HDB explained in a Straits Times forum letter in 2020 that it obtains its mortgage loan funding from the Government at the CPF OA interest rate. The additional 0.
“If we refer to the Excel spreadsheet of interest rates from CPF, it shows a 4.41 per cent interest rate on our Ordinary Account from January to June 1999. This means our HDB concessionary loan rate would have been 4.51 per cent. Mr Chia expects the Fed to increase interest rates to about 3.5 per cent by the end of the year, but he does not think bank savings rates here will rise enough to affect the CPF OA rate.
With rising inflation, there were questions in Parliament this month about whether the CPF interest rates should rise to keep pace, and Manpower Minister Tan See Leng’s reply was that despite the low interest rate environment, the Government has continued to pay generous interest rates due to the floor rates.
Mr Chow said that one is the smaller downpayment compared with a bank loan. HDB allows home buyers to borrow up to 85 per cent of the property’s value versus 75 per cent for bank loans.