Home Equity Banks Home Loans Now!

Some people claim that DBS, OCBC and UOB are safer They always point to instances where foreign banks raise lending rates for home loans.

For some, safer means a perceived safety in terms of financial strength of the bank.

All banks who are licensed to operate in Singapore have passed the intense scrutiny of Monetary Authority of Singapore.Regulatory oversight of the banks in Singapore is rather stringent with high Capital Adequacy ratio.

In terms of safety, Singapore’s banks regardless of local or foreign are quite solvent.
The rules and requirements for both the local and foreign banks are the same.

Ms Angelina, Director of MAS – Communications published a statement on My Paper on 26 Sep 2008 which said““Our regulations also require foreign-bank branches in Singapore to maintain a proportion of the assets of their Singapore branch in safe and liquid Singapore dollar-denominated and Singapore-domiciled assets.”
In any case, depositors have first claim over assets of any banks in the case of a wind up. The funds required as a deposit by the banks will be used to compensate the savers first. Now, Singapore government guarantees the deposit of all deposit accounts in Singapore.

Is it fair for banks to claim that they are safer from raising interest rates if buyers go with their variable rates home loan just because they are local?

Do local banks really have lower cost of lending and therefore will not raise home loan lending rates for variable rate loans as easily as other foreign banks?

First and foremost, banks will not tell you how much funding and what is their cost of funds as it is somewhat secret, although you can find some related information in their financial report if they are listed entities.

So who can we believe?

Secondly, there is no guarantee that lower cost translate into lower lending rates, of course higher cost will almost certainly translate into higher lending rates. If the prevailing lending rates have increased, what would stop the banks from raising rates to improve their margins?

The only way to have reasonable rates is to have healthy competition amongst banks.

Many foreign banks operate like local banks, staffed with locals. They even base their support centres in Singapore. These banks may have obtained QFB status (Qualifying Full Bank) status, which makes them very much like local banks.

Source of funds
Certain banks such as DBS may have a larger depositor base and larger sources of cheap funding given that many Singaporeans grew up with a POSB savings account.

To do Singapore home loan comparison, the safety and solvency of the bank is not of critical concern, unless you have very high leverage in your home loan.

The best safety measures falls on the shoulders of home buyers, property buyers, property investors. They should first consider whether they can afford the property before committing to it. As long as they are not over-borrowing, in case the bank asks for top up of cash or recalls the loan, other banks may be willing to take over.

Safety starts with you making the right decision for yourself. It starts with choosing the right property at the right price, at the right affordability level and engaging the right Singapore home loan and mortgage consultants – brokers to help you do a comparison and assess and structure your home loans.

Therefore when you Compare singapore home loan, focus on a home loan meeting your personal requirements and cash flow needs and give yourself that safety first.

For Singapore home loans refinancing, it is the same case.

Safety starts with you and ends with you, you own your decision and you own your destiny. You have no control over the bank, but you can decide whether you want to make certain financial decisions.

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