OCBC Home Loan Review (2022): BUC Home Loans, Fixed and Floating Rate Packages

·6-min read
OCBC Home Loan Review (2022): BUC Home Loans, Fixed and Floating Rate Packages
OCBC Home Loan Review (2022): BUC Home Loans, Fixed and Floating Rate Packages

Considering an OCBC home loan for your upcoming property or thinking of refinancing to one? Then this guide’s for you.

First things first, a quick introduction to OCBC: Formed in 1932, OCBC is the second largest bank in Southeast Asia by assets today. While no one in Singapore really needs an introduction to the bank, it’s safe to say that OCBC has also made its mark globally. OCBC has consistently ranked amongst the top 50 Safest Banks in the world by Global Financial Magazine and was recently named the Best Managed bank during COVID-19 by the Asian Banker.

Now, what’s happening in the market: On 16 June 2022, the US Fed raised interest rates by 75 basis points, the largest rate hike since 1994. In the upcoming meeting, it is likely that another 75-basis point or 50-basis point move will occur. In response to rising interest rates, major banks in Singapore, including OCBC, have raised their mortgage rates.

In this article, we’ll take a look at the home loan packages offered by OCBC for both HDB and private property owners. These include fixed rate and floating rate mortgages.

Disclaimer: The mortgage packages mentioned in this article are correct at the time of writing [19 July 2022] and are meant as a guide only. The interest rates are subject to change, and you should compare the latest home loan rates and packages on PropertyGuru Finance before applying for a new home loan.

OCBC Home Loan Summary

OCBC home loan summary

Type of home loan

BUC home loans

OCBC No Lock (1M or 3M SORA) floating rate BUC package

Floating rate home loans

OCBC 2-Year (1M or 3M SORA) floating rate package

Fixed rate home loans

OCBC 2-Year fixed rate package

For all of OCBC’s home loan packages, there is a minimum loan sum requirement of $200,000 for HDB flats and $300,000 for private properties.

OCBC Fixed Rate Home Loan Packages

On its fixed rate home loan, OCBC allows homeowners to lock in their mortgage repayments for two years. Current fixed rates for OCBC (as of 19 July 2022):

Year

OCBC 2-Year fixed rate package

Year 1

2.98%

Year 2

2.98%

Year 3

1M SORA + 1.20%

Thereafter

1M SORA + 1.60%

The 2-year package comes with one free package conversion (for new loans only). Fixed rates protect you from rate fluctuations for a period of time. Those who are risk averse (especially amid the current rising interest rates) may appreciate such stability. For the benefit of having this certainty in your monthly mortgage repayments, you typically would have to fork out a slightly higher interest rate compared to floating rate packages.

For the OCBC package, after the fixed rate period, the mortgage rate is pegged to the Singapore Overnight Rate Average (SORA). The SORA is the “volume-weighted average rate of borrowing transactions in the unsecured overnight interbank SGD cash market in Singapore between 8am and 6.15pm”.

Related article: SIBOR vs SOR vs SORA: What Do These Rates Mean for Your Home Loans?

Fixed mortgage rates across local banks in Singapore have been increasing. On 1 July 2022, OCBC’s two-year fixed rate increased by 0.33 percentage points to 2.98%.

Paul Wee, Vice President, PropertyGuru Finance, PropertyGuru Group, explains, “Many banks in Singapore have withdrawn fixed packages given the steadily rising interest rates. We expect banks to continue monitoring these packages closely and replace them with fixed-rate packages with higher rates, as and when there are significant movements in the reference rates. The likelihood of banks withdrawing fixed-rate packages altogether also increases significantly when interest rates become too volatile.” 

OCBC Floating Rate Home Loan Packages

At the moment, OCBC offers two 2-year floating rate home loan packages, pegged to the SORA. According to the PropertyGuru Finance Mortgage Comparison tool and the OCBC website, current floating rates packages for OCBC (as of 19 July 2022) are:

Year

OCBC 2-Year 1M SORA floating rate package

OCBC 2-Year 3M SORA floating rate package

Year 1

1M SORA + 0.80%

3M SORA + 0.80%

Year 2

1M SORA + 0.85%

3M SORA + 0.85%

Thereafter

1M SORA + 1.00%

3M SORA + 1.00%

Both loans offer partial pre-payment options and a free package conversion (new loans only).

As its name suggests, floating rates fluctuate according to their reference rates. This means that when the reference rates increase or decrease, homeowners would see their mortgage repayments moving accordingly. This is unlike those who choose fixed rate packages – who are sheltered from interest rate increases but also do not enjoy any possibility for lower rates (during the lock-in period).

Regarding floating-rate packages, Paul mentions: “Based on expectations of the 3-month-compounded SORA rates hitting 2.50% and assuming a fixed spread of 0.8% (which is determined by the banks), we can potentially be looking at a net rate of 3.3% for floating-rate packages in the next few months.”

OCBC BUC Home Loans (For Residential Properties Under Construction)

For under-construction properties, you can choose a BUC home loan pegged to the 1-month or 3-month SORA. Current rates (as of 19 July 2022):

Year

OCBC 1M SORA BUC package interest rate

OCBC 3M SORA BUC package interest rate

Year 1

1M SORA + 0.80%

3M SORA + 0.80%

Year 2

1M SORA + 0.85%

3M SORA + 0.85%

Thereafter

1M SORA + 1.00%

3M SORA + 1.00%

For both the 1M and 3M SORA BUC packages, the spread is similar to the floating rate home loan packages for completed properties.

Both BUC packages apply to HDB and private properties and have no lock-in period. They also come with perks such as allowing partial prepayment, waiver due to sales, and one free package conversion.

OCBC Home Loan Review: Should You Consider It?

Other than the interest rates of the loan packages, there are other factors that should be taken into consideration before taking up your home loan. Here are some of the attractive considerations when taking up an OCBC home loan.

Free Conversion

Free conversions are always welcome, especially during uncertain times when interest rates are fluctuating. Many OCBC packages currently offer this perk for new loans only.

Prepayment Of Up To 50% Of Loan Amount During the Lock-In Period

For both of its floating rate packages, there is no prepayment penalty for up to 50% of the loan amount in the first two years. The offered flexibility allows homeowners and/or investors looking to take advantage of the competitive interest rates as a cheap funding source or having a need to sell off their properties during the lock-in period.

Reputable Bank in Singapore

As mentioned at the start of this article, OCBC is a world-famous bank with many accolades to its name and a 90-year track record. If the reputation of the bank matters to you and/or if you have a personal preference for a local lender, OCBC is definitely worth considering.

You can review the details of OCBC’s various home loan packages on PropertyGuru Finance, as well as compare rates from major banks in Singapore to enjoy the best home loan rates.

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Thinking of getting a bank home loan? Compare the best mortgage rates on PropertyGuru Finance, or contact us for more personalised advice and recommendations:



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