Originally Posted by
k00L
A bank can hardly lose money by issuing board rate loan as bank can raise its board rate anytime to cover cost.
Whereas for sibor rate + 0.85% loan, the bank is making a fixed spread of 0.85% from you for rest of the tenor, and has to cover all unexpected costs e.g mortgage defaults , rise in capital charges, etc. Such costs could go over 0.85% of profit during credit crunch times
As a consumer, go for sibor loan. If you are a bank, issue board rate loan
there is no such thing as 100% fixed rate, if you read the fine prints, there will always a clause for the banks to make adjustment if they have to
"Never argue with an idiot, or he will drag you down to his level and beat you with experience."