HSBC Home Loans Offer 'Portability' Perk

Source : The Straits Times, July 22 2009

Scheme allows borrowers to carry forward the discount level they have reached to their new home.

HSBC borrowers with either the bank's Singapore Interbank Offered Rate-pegged (Sibor) loyalty package or its Sibor-pegged relationship- based loan package will now not lose any of the time-related loyalty discounts they have earned when moving house.

The bank has launched a loan 'portability' feature for those with these packages. This allows them to carry forward the discount level they have reached to their new home. Customers can sell their property and continue from where they left off on the sliding interest rate spread offered to them under the two specific loan schemes.

For the relationship-based home loan package, HSBC customers see a year-on-year decrease in the interest spread until the 10th year, when it hits zero.

The Sibor-pegged loyalty home loan deal cuts the interest rate spread at the end of every anniversary year, up to the third year of the loan.

The two packages - both launched last year - are designed to reward longer-term borrowers.

Typically, loans pegged to the Sibor - the rate at which banks lend cash to one another - have either flat or increasing interest rate spreads.

Under the new arrangement, if a customer has a Sibor-pegged relationship-based loan and sells his property in the third year of the loan when the interest rate is 1.69 per cent - Sibor plus 1 per cent, assuming Sibor is 0.69 per cent - he can enjoy a first-year loan interest rate of 1.69 per cent on his new property.

From there, he can go on to enjoy the year-on-year decrease in interest rate spreads offered by his original Sibor-pegged deal with the bank.

Mr Sebastian Arcuri, HSBC's head of personal financial services, said that loan portability meant customers can enjoy the flexibility to redeem their loan, buy a new home and still benefit from a lower interest rate spread year on year.

He added that for customers to enjoy this benefit, they must have a total balance of $100,000 and above in deposits, investments and insurance with HSBC. They must also finance their new home loan, on a completed property, within six months.