Debated in Parliament on 14 Jan 2013.
Mr Zainal Sapari asked the Minister for National Development (a) why HDB concessionary and HDB market interest rates are higher compared to those imposed by the commercial banks; and (b) are HDB buyers worse off in taking HDB loans compared to if they had taken commercial bank loans.
The HDB market interest rate is the moving average of the long term HDB housing loan rates levied by the three local banks (DBS, OCBC and UOB). It is subject to the floor rate of the HDB concessionary interest rate. The latter is pegged at 0.1%-point above the prevailing CPF interest rate.
While these rates are currently above the short term promotional mortgage rates of commercial banks, the promotional rates are unlikely to remain low indefinitely.
As housing loan tenures run into years, rate comparisons should be done over the long term. Over the past 20 years, for example, HDB's concessionary interest rate has been, on average, 1.5%-points lower than the banks' market rates. HDB's non-concessionary loans are only offered on an exceptional basis, upon appeal.
Page: 118
PAPERCUTS