Residential buildings at a Housing & Development Board (HDB) public housing estate in Singapore, on Tuesday, Aug. 20, 2024. Photographer: Ore Huiying/Bloomberg
SINGAPORE: Mortgage loan refinancing and repricing activity by private home owners and Housing Board (HDB) flat owners picked up significantly in 2024 after fixed mortgage loan rates fell below 3% from the second quarter.
Following the US Federal Reserve’s (Fed) successive rate cuts from September 2024, local banks told The Straits Times that they saw a more pronounced increase in mortgage loan refinancing and repricing transactions.
Refinancing involves taking out a new home loan with a different bank after the current loan exits the lock-in period.
Repricing, meanwhile, refers to switching to a new loan package with the existing bank after the lock-in period for the current loan ends.
UOB saw HDB loan refinancing transactions climbing 85% in 2024 from a year ago, and rising 60% year-on-year for the June to November 2024 period. Private residential loan refinancing transactions for 2024 rose almost 15% from 2023.
UOB group personal financial services head Jacquelyn Tan cited “potential savings from a lower interest rate environment, as well as attractive terms and perks offered by financial institutions”.
Singapore DBS Bank home financing head Chelsea Ling noted that many of its customers have been inquiring about one-year to three-year fixed-rate home loan packages, which range from 2.6% to 2.9% per annum.
“This trend is particularly prominent among customers whose existing loans have exited the lock-in period and are currently on floating rates, which remain higher than fixed rates,” she said.
She added that there was a notable increase in refinancing and loan repricing applications between September and November 2024. “This marks a shift from June to August 2024 when many customers adopted a wait-and-see approach,” she said.
In particular, average monthly new bookings or approved loans for the POSB Bank’s HDB home loan jumped 70% in October and November 2024, after DBS in September launched three-year to five-year fixed-rate packages ranging from 2.5% to 2.65%, Ling noted.
Redbrick Mortgage Advisory associate director Clive Chng also saw a steady increase in HDB flat owners refinancing their mortgages from June 2024, after some banks offered five-year fixed-rate packages at 2.5%, below the HDB concessionary interest rate of 2.6%.
“Many home owners expect further rate cuts. Despite the irreversibility of switching out of an HDB loan, they are confident they can refinance again at even lower rates in future if the trend continues,” he said. Chng added that although the rise was notable, it was not as dramatic as in the mid-2019 to early 2020 period when interest rates fell more sharply.
“Back then, the number of HDB refinancing cases jumped 40% to 50% in a few months,” he said.
He noted that the uptick in refinancing by private home owners was more pronounced from August till end-December 2024 because interest rates for three-year fixed-rate packages dropped below 3%, from 3.3% to 3.5%. — The Straits Times/ANN
