6 October 2006
I refer to the letters entitled "First discounts" from Ms Angeline Lee and "Spiralling rates" from Mr Deepak Gurnani.
The home loan schemes in the market are indeed quite complex. Many financiers in the market offers different board rates for their home loans. When the board rate changes, the customer may be confused, and is not sure if he still enjoys a competitive rate.
NTUC Income provides an alternative to owners of private properties. We adopt a simple and transparent approach for our loan scheme. We have only one board rate for home loans on variable rates. This applies to all loans taken from us. As the board rate changes, we notify our customer in advance. They know clearly what is the interest rate that they pay at any time.
We revise our board rate to keep in line with the market, but we try to minimise the frequency of changes. Our current board rate is 3.5% per annum, and has been effective since January 2004. We have not changed this board rate for the past 33 months. From 1 Nov 06, we will raise our board rate by a modest increase of only 0.25%. The revised board rate will be only 3.75% per annum, probably among the lowest in the market.
NTUC Income also offers a fixed rate scheme, which keeps the rate fixed at 4.15% per annum for the first 5 years. The interest will revert to the board rate after 5 years. We give an option to the customer to switch to the board rate at the end of the 3 years. This option provides an additional flexibility to the customer to enjoy lower interest rate, under certain circumstances.
We believe that many customers prefer a simple and transparent scheme for their home loans. We offer free processing, valuation and home insurance for the first year of loan. For a customer who switch their existing home loans from another financier to our fixed rate loans, we provide a legal subsidy of up to $2,000.
More details are available fromour website: www.income.coop/loans.
Head, Loan & Property
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