Jan 12, 2019

Cory Diary : DBS FHR8

I have the opportunity to re-price my housing loan with DBS. There are 2 options currently other than doing nothing which will be paying more.

Additional Information

For the first 2 years, the gap all-in is about 0.345% between Fixed and Floating package.
FHR is tied to DBS Fixed Deposits 8 months rate. The rate is kind of "Board Rate". I read somewhere that there is limits on how much a bank can change as there is some MAS oversight. Not sure is true and how stringent will MAS allows though. Nevertheless there is more transparency in how the final loan rate is charged.

Rationale for Fixed Package

This 0.345% gap can be closed within a year of rate rise which could make the Fixed package more attractive however the spread for year 3 and 4 will be wider and to floating method. Since the lock-in period is 2 year, i could re-price again but there is some work and fees to consider. I think DBS structured this way so that they can manage their fixed package risk.

Rationale for Floating Package

If there is no significant upward moves for the first 2 years in FHR8 rate, the floating package could be cheaper than fixed. This is especially so with Fed recent rate hike that invited some quarters of criticism. And they may stay low for Year 2019. Not sure about 2020 though. However with SSB limits up from 100k to 200k the bank may up the rate to make themselves more attractive. This won't matter much if there is no one to lend to with property curbs on-going or recession strikes. So if all goes well, there aren't need for a re-pricing exercise after lock-in period unless we like to do a refinance to other banks or there is a better re-price package like FHR4 ? :)

Seems like either options will work fine as they do not offer significant advantage over one another. I would probably choose the later.



  1. Did you consider refinancing? Both rates from DBS does not look that attractive. I am also on DBS and on 3 year fixed FHR package until end of this year.

    1. I would try to avoid refinancing because I am based oversea. I have better experience from DBS loan personnel due to my assignment. They are more eager to lend me compared to OCBC who do not seem keen at all. There are also quite an amount of paper work to do for refinance. Another reason I like about DBS Floating is because if I decided to retire, my loan will not be affected after 2 years since the rates computed is still the same.

    2. I got an offer. So repriced to 2 year fixed and float after. Cheers