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Source:
www.abs.org.sg |
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BANKS TO ADOPT NEW GUIDELINES ON HOME LOANS |
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Guidelines aim to promote transparency in
communication to customers on home loan board rates. |
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The Association of Banks in Singapore (ABS)
today (8 Jun 2007) announced that in a move to demonstrate greater
transparency, with effect from 15 June 2007, member banks will abide by
a set of guidelines collectively drawn up by the industry when offering
home loan packages to consumers. |
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These guidelines provide customers with
clear disclosures on the use of home loan board rates, the financial
indicator(s) against which these rates are benchmarked, and the basis
for the change in the rates over time. |
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The new measures mean that banks must now
disclose even more pertinent information to help customers decide on
their home loan packages. The information that customers will receive is
as follows:- |
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1) The Board Rate (BR) quoted to the
customer is applicable to him/her only for the loan package that he/she
is interested in (eg HDB flat financing with fixed rates), as well as
the financial indicator(s) against which the BR is benchmarked, eg the
three-month SIBOR (Singapore Interbank Offered Rate), Prime Rate, CPF
Rate, etc. |
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2) The BR offered to the customer for
his/her loan package may be different from the BRs offered to other
customers of different loan packages. |
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3) The BR can be changed by the bank
anytime, by giving 30 days¡¯ notice, depending on market conditions and /
or changes in the financial indicator(s) against which the BR is
benchmarked. (The 30-day notice requirement does not apply to home loans
benchmarked against market indices.) |
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4) The detailed loan repayment
schedule for the loan package that the customer has chosen is
available in hard copy on request, or in soft copy over the
Internet in the form of a loan calculator on the bank¡¯s website. |
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5) An ABS Guide on home loans is
available, and customers are encouraged to read it before
committing to a loan. |
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Furthermore, under the new guidelines,
banks will be required to incorporate the first three disclosures
in customers¡¯ Letter of Offer. |
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The new measures also require banks to
explain to customers in the event of a revision in interest rates
why the rates have changed and to provide a revised repayment
schedule upon request. |
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The new guidelines are applicable to
loans taking effect from 15 June 2007 and not to loans committed
before that. |
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To heighten the public¡¯s awareness and
understanding of home loans, the ABS has also worked with
MoneySENSE, the national financial education programme, to develop
and fund a Consumer Guide titled, ¡°What you need to know about
home loans ¨C Key questions to ask your bank before taking a home
loan¡±. |
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The Guide, which is printed in English
and Chinese, will be available for distribution to potential
housing loan customers from 15 June 2007. It will also be
available in four languages on the ABS and Monetary Authority of
Singapore (MAS) websites. |
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Says Mrs Ong-Ang Ai Boon, Director of
the ABS: ¡°The Association is committed to promoting fairness and
transparency in banking practices, and the guidelines are a result
of our working with member banks to raise home loan transparency.
They also represent concrete steps taken collectively by the
industry to educate customers on how home loan packages are
structured and the circumstances under which the packages can
change.¡± |
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Source:
www.abs.org.sg Media Release 8
Jun 2007 |
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Banks to adopt new guidelines on
home loans