Singapore banks DBS, OCBC and UOB have raised their home loans fixed rate package to 3.5 per cent after US Federal Reserve raised benchmark interest rates by another three-quarters of a percentage point in September.

The Federal Reserve officials signaled the intention of continuing to hike until the funds level hits 4.6% in 2023 as the FOMC is determined to bring inflation down to 2%.

The latest rate adjustments mean that Singapore banks mortgage rates are now at their highest since year 2008.

DBS is raising its rates from the earlier 2.75 per cent to 3.5 per cent. This is a 0.75 percentage point increase by Singapore’s largest bank. 

Borrowers of DBS home loans can opt for fixed rate ranging from two to five years lock-in period. 

DBS bank also introduced a new home loan package last week to allow new and existing HDB flat owners earning less than S$2,500 a month to take up a mortgage loan with POSB at only 2.6 per cent per annum.

UOB announced that its latest two-year and three-year fixed rate home loan packages are 3.75 per cent and 3.85 per cent, respectively.

OCBC two-year fixed rate has been revised from 2.98 per cent to 3.5 per cent. For customers whom are confident that interest rates will not spiral out of control, they may opt for UOB one-year fixed rate package at 3.35 per cent which is the lowest on the market right now. 

It will also appeal to those homeowners who are planning to sell their residential property next year. 

Most banks will impose an full redemption fee if the house is sold within the lock-in period. 

All the three local banks have left their floating rate offerings pegged to the benchmark Singapore Overnight Rate Average (SORA) intact.

DBS floating rate loan remains at 3-month SORA and a spread of 1 per cent per annum, with a two-year lock in period.

UOB is offering a floating rate of 3-month SORA plus a margin of 0.7 per cent per annum for the first two years, and 0.8 per cent for the third year onwards.

Buying sentiment in the property market is expected to weaken towards the end of the year with the rising interest rate environment, said Chia, Managing Director at Propertyforsale Pte Ltd.

“We advise homeowners to contact us as early as possible to better understand how changes in interest rates will affect their home loans and we can direct them to refinancing or repricing their mortgage loan early to reap the savings and mitigate risks,” said Mr Chia.

Last week, Singapore Government implemented new property cooling measures to moderate HDB buying demand and tighten borrowing limits.