OCBC Home loan increase by 1%

[Pynchmail]

Now, the more important question is whether OCBC has just followed Citi and done the same. If the Board rates remain unchanged but the interest went up by 1%, then they have unilaterally adjusted the spread by 1%. This is far worse than Citi's adjustment of 0.2%.

[MortgageGuru]

Now, the more important question is whether OCBC has just followed Citi and done the same. If the Board rates remain unchanged but the interest went up by 1%, then they have unilaterally adjusted the spread by 1%. This is far worse than Citi's adjustment of 0.2%.

Board rate increase, not the spread.
In board rate, the spread is actually the discount.

So for 1.28%, it will be 3.22% below BR.
The only fixed is 3.22%, or you may call it spread as well.
So basically, BR rise to 5.5 and thus derive the 2.28% payable.

[amk]

Even if one takes a SIBOR based housing loan, the bank can also increase its margin. I know of a case where the bank informed the borrower that the rate increased from SIBOR+0.7% to SIBOR+0.9%.

To Pynchmail: can you name the bank that did this ? that it changed a promised *spread* over SIBOR ?

( Note this has nothing to do with the current TS's OCBC case. For "Board rate", bank can do whatever he wants. "Board Rate" is not a market reference rate, it is equivalent of some one writing a number on a blank piece of paper any time he wants, aka a blank cheque.)

[amk]

Board rate increase, not the spread.
In board rate, the spread is actually the discount.

So for 1.28%, it will be 3.22% below BR.
The only fixed is 3.22%, or you may call it spread as well.
So basically, BR rise to 5.5 and thus derive the 2.28% payable.

You should educate your customers like this:

"Board Rate" is an arbitrary number set by the bank, at any time the bank wants, at any number he wants, in any way he wants.
"Board Rate" can , and will, change every day, even for the same project, submitted on the same day, even for the same buyer (of multiple units).
The so-call "discount over board rate" is completely meaningless and even moot. An unknown number ("board rate") minus a fixed number ("discount") is still an unknown number.

So mathematically, your rate today is an unknown number X - 3% = 1.28%. Tomorrow, I don't know. Since number X is not fixed and can be anything, the "3% discount" is completely meaningless. For example, tomorrow bank can say the X applicable to you is 10% so you pay 7% now.

Taking "Board Rate" is equivalent of you signing a blank cheque to the bank, and say to the bank "please, write whatever rate you want to charge me, and I will take it" !

Sorry to the TS, I just cannot believe, at this time and day, there are still people taking "board rates" ! Any other package, be it SIBOR, FHR, FDMR or something, etc are better.

[Kelonguni]

Some board rates come with no lock-in and refinancing options.

For pre-TOP units, board rate still ok. Can slowly understand the market and switch when the time comes. The sums involved are also tiny.

You should educate your customers like this:

"Board Rate" is an arbitrary number set by the bank, at any time the bank wants, at any number he wants, in any way he wants.
"Board Rate" can , and will, change every day, even for the same project, submitted on the same day, even for the same buyer (of multiple units).
The so-call "discount over board rate" is completely meaningless and even moot. An unknown number ("board rate") minus a fixed number ("discount") is still an unknown number.

So mathematically, your rate today is an unknown number X - 3% = 1.28%. Tomorrow, I don't know. Since number X is not fixed and can be anything, the "3% discount" is completely meaningless. For example, tomorrow bank can say the X applicable to you is 10% so you pay 7% now.

Taking "Board Rate" is equivalent of you signing a blank cheque to the bank, and say to the bank "please, write whatever rate you want to charge me, and I will take it" !

Sorry to the TS, I just cannot believe, at this time and day, there are still people taking "board rates" ! Any other package, be it SIBOR, FHR, FDMR or something, etc are better.

[amk]

For pre-TOP units, board rate still ok. Can slowly understand the market and switch when the time comes..

For pre-TOP deals, banks make more on cancellation charges when you go out. So banks have even more reason to force a high board rate on you since they know you have to take it since you will lose more if you go out, even when there is no lockin charges.

No, board rate is a no go under any condition.

[Kelonguni]

But the bank will have Sibor linked and FD linked or even fixed rate when it's time to refinance or reprice. Can switch to more transparent rates then.

I have taken OCBC board rate before and they raised by 0.6%. When it's time, just switch to FDMR rates. No issue also. Unless FDMR rates move which is transparent.

For pre-TOP deals, banks make more on cancellation charges when you go out. So banks have even more reason to force a high board rate on you since they know you have to take it since you will lose more if you go out, even when there is no lockin charges.

No, board rate is a no go under any condition.

[MortgageGuru]

Board rate is still fine to take up for BUC properties as they usually gives a pretty low margin for BUC and the cost involved are not much even if the interest rise before TOP.
Thereafter, then is the real world, just like after giving 2 years of your youth to national service.

[teddybear]

No, if you are referring to "mortgage loan Board rate".

As many people have mentioned before, "Board rate" is a rate determined by the bank itself, and they can write any number, and your friend's "board rate" for his mortgage loan can be different from the "board rate" for your loan at the same time!

That is it! "Board rate" for loan 1 can be different for "Board rate" for loan 2 etc even for the same person taken from the same bank! The bank can just pen any number they like!
And don't check the bank's printed "Board rate" because they will claim that their published "Board rate" on their "board" is different from your "mortgage loan's Board rate"!

Remember, the loan contract are different!
With board rate mortgage loan contract, it will be written like "Board rate - X%". The bank will not change the "-X%" but they can unilaterally change "Board rate" since the loan contract said they can do so!

With SIBOR or FDR pegged contract, it will be written as "SIBOR +X%" or "FDR +X%" and again the bank has no right to change the "+X%" (and Citibank having done that does not mean they have the right to do so! Somebody should just challenge them! Ask them to show which clause in the contract they based on to allow them to change the "X" number?). They can only change SIBOR or FDR.

With SIBOR, it is determined by a number of banks submitted to ABS/MAS.
With FDR, again it is unilaterally decided by the bank but they cannot run away with hiking it without increasing their costs of FD rate (so you have some safety in there that they can't anyhow jack up your FDR rate).

Whether you take SIBOR (which is more transparent - unless the banks and/or their employees work in cohort and try to rig it like LIBOR) or FDR (bank have to consider their FD costs before hiking it) will be up to your own assessment.

Now, the more important question is whether OCBC has just followed Citi and done the same. If the Board rates remain unchanged but the interest went up by 1%, then they have unilaterally adjusted the spread by 1%. This is far worse than Citi's adjustment of 0.2%.

[MortgageGuru]

On a side note, citibank is offering 1.90% fixed 2 years and legal subsidy of $2000.

[teddybear]

Citibank?
Ha ha ha! How to trust them like that when they can break their side of the signed contract and increase the fixed spread and still without telling their clients which "clause in the mortgage loan contract" they based on to increase the "X" number? As far as I can see, all the reasons they give to increase the "X" number (when questioned by the journalist) are either IRRELEVANT or "ILLOGICAL"!

I will never have any dealing with Citibank regardless of whatever good deal they give now, since who knows, good deal will become "broken" deal later on (just like their SIBOR loan)???

Better stick with banks that are more honorable and will abide with the contract they signed!

On a side note, citibank is offering 1.90% fixed 2 years and legal subsidy of $2000.

[MortgageGuru]

2 years is not a very long period a risk to clients, especially people who have intention to sell off in the near future.

[Pynchmail]

To Pynchmail: can you name the bank that did this ? that it changed a promised *spread* over SIBOR ?

( Note this has nothing to do with the current TS's OCBC case. For "Board rate", bank can do whatever he wants. "Board Rate" is not a market reference rate, it is equivalent of some one writing a number on a blank piece of paper any time he wants, aka a blank cheque.)

Already named. See post #25 above.

[Pynchmail]

I am surprised to learn that Board rate is specific to each loan. I thought each bank has one Board rate, hence they can say the Board rate has not changed for x years etc.

[MortgageGuru]

I am surprised to learn that Board rate is specific to each loan. I thought each bank has one Board rate, hence they can say the Board rate has not changed for x years etc.

Generally it's one board rate at a time, so maybe 2015 board rate rise but 2014 did not. Something like this.

[amk]

To Pynchmail : so it's just Citi. We all knew this on this board. As far as I know, no other bank has ever done this.

You must be very young. "each bank has one board rate" ? never. Even on the same project, sign on the same day with the same bank, you can have diff "board rates".

The applicable "board rate" to you can be changed any time. Whenever bank wants to raise bottom line, he will pick one batch and raise them, and tell you *your* board rate has changed.

[teddybear]

I think you must have been confused because the bank publish a "Board Rate" on their e-notice board at the bank's branches and then tell you that your revised "Board Rate" is another higher number right?

Well, just remember: the bank's published "Board rate" on their e-notice board is different from your "mortgage loan's Board rate"!.
That was what I was told previously by the bank (years ago) and I am telling you now that you will get the same answer from the bank!

I won't be surprised what they told you about "Board Rate" not having changed for many years is true because your "mortgage loan's Board Rate" always move up very fast when market interest rate goes up but barely drop when market interest rate falls drastically like a stone into the bottom of the ocean (and they only increase the "X" in "BR -X%" to entice and trap people into taking up board rate loans)..............

I am surprised to learn that Board rate is specific to each loan. I thought each bank has one Board rate, hence they can say the Board rate has not changed for x years etc.

[teddybear]

I never like dealing with dishonorable people/entity, and I think you and the rest of the people should too to avoid getting burnt when they decide to turn their back with some irrelevant and illogical lame excuses.............

2 years is not a very long period a risk to clients, especially people who have intention to sell off in the near future.

[keyur]

Hi, I am referring to OCBC Bank.. What I am most pissed of is I received offer from OCBC for re-pricing my loan, where I switch to once again to Board package where my interest for the first year is 1.8% (5.1% Board rate -3.30%) . The Board rate on which I had taken loan was increased from 4.5% to 5.5%, when I asked bank on this question they informed me that they operate with multiple Board rate. This was shock for me that how such a large bank can operate with multiple Board Rate ? What are the norms from MAS and control for Bank to change this.. If any one has ideas please share with me....

[keyur]

Hi, I am referring to OCBC Bank.. The item which has pissed me off that Bank has multiple Boar Rate.. The Board rate on which I had taken loan was 4.5% when I had taken loan and now they have increased to 5.5% i.e 1% increase.. However, when I had checked for repricing they send me another option with Board rate where the 1 year interest was 1.8% (5.1% Board rate -3.3%). When I asked Bank how they have 2 different Board rate the response was we have multiple Board rate. This makes me feel how Bank can have multiple Board rate ? What is the governance on this ? Is any agency such as MAS reviews and monitor this ?

[Kelonguni]

Why don't you ask for FMDR rate from OCBC? At least more transparent...

Hi, I am referring to OCBC Bank.. The item which has pissed me off that Bank has multiple Boar Rate.. The Board rate on which I had taken loan was 4.5% when I had taken loan and now they have increased to 5.5% i.e 1% increase.. However, when I had checked for repricing they send me another option with Board rate where the 1 year interest was 1.8% (5.1% Board rate -3.3%). When I asked Bank how they have 2 different Board rate the response was we have multiple Board rate. This makes me feel how Bank can have multiple Board rate ? What is the governance on this ? Is any agency such as MAS reviews and monitor this ?

[amk]

..This makes me feel how Bank can have multiple Board rate ? What is the governance on this ? Is any agency such as MAS reviews and monitor this ?

... haiz...

of course bank can have multiple board rates.

this is banks' internal arbitrary rate. you signed on the dotted line agreeing bank setting this rate totally at bank's discretion. (See post #34). you have no grounds to protest.

MAS does not regulate how a bank sets its own price. It's free economy.

MAS only regulates how a COMMON rate like SIBOR/SOR is set (which is called a FIXING).

Ppl really don't appreciate how SIBOR packages came about: there was no SIBOR mortgage in the past, only board rate. Exactly because board rate was so arbitrary, leading many consumer complaints, DBS, serving as the "people's bank", was "forced" by MAS to offer SIBOR rates, thus changing the industry. MAS had done his part.

And yet if ppl still choose board rate, you must have done your calculations and taken your risks. you really have nothing to complain.

[Kelonguni]

Or how about DBS May Day Special?

1% for 1st year (first 1mil) and FHR18 + 1.2% from second year?

I hope they have this promotion every May Day.

[newbie11]

3 years lock in. What do you think