Issue 284

Copyright 2011-2016 www.propwise.sg. All Rights Reserved.

CONTENTS
p2

FROM THE

EDITOR

Mortgage Interest Offset Accounts What

Welcome to the 284th edition of the

Singapore Property Weekly.

Are They and How Do They Work?

Hope you like it!

p7

Resale Property Transactions

Mr. Propwise

(October 17 October 21)

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SINGAPORE PROPERTY WEEKLY Issue 284

Mortgage Interest Offset Accounts What Are

They and How Do They Work?
By Andrew Adriaan (guest contributor)

Homeowners are overwhelmed by the many

different housing loan packages offered
across
banks
in
Singapore.
While
homeowners generally seek the most
competitive housing loan rate or packages,
they often overlook other available mortgage
product features, which help assist in the
further reduction of financing costs.
Innovative mortgage products such as the
Interest Offset Account are generally
assumed to be a gimmick, but this is due to a
lack of understanding in how it helps to
reduce costs.

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SINGAPORE PROPERTY WEEKLY Issue 284

What are Interest Offset Accounts and
how do they work?
An Interest Offset Account is generally the
repayment account that is tagged to your
housing loan. Like all repayment accounts, it
is a savings account used for your monthly
repayment and other miscellaneous costs
pertaining to your housing loan. Unlike a
normal repayment account that generates no
interest on your deposit, this account will be
able to give interest rates that match your
housing loan interest rate to your deposit.
The matching interest rate, however, does not
apply to your full deposit, but to a certain
percentage, depending on the features
offered by each bank. These Offset accounts
do not require the funds to stay for a fixed
period of time, and there is often no minimum
requirement to qualify for the interest

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earnings.
Whats in it for borrowers/homeowners?
The interest-offset account can
borrowers in the following ways:

benefit

The effective interest rate will be lower as

interest charged on the mortgage loan is
reduced
The outstanding housing loan is paid up
faster, thus reducing cost of financing as a
result of interest being calculated on a smaller
loan quantum

Interest savings increase when deposits

are maintained at the same amount or more,
as the balance outstanding will reduce
significantly with the off-setting feature

Possibility of an interest-free loan

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SINGAPORE PROPERTY WEEKLY Issue 284

Who can benefit from it?

market.

The Interest Offset Accounts will benefit the

majority of homeowners the account is not
meant only for high net worth individuals.

Some specific examples

Any borrower can use this as their savings

account to earn higher interest rates as
compared to the traditional savings account.
Depositing a couple of hundred dollars a
month can reduce the overall interest
payment as effectively as a one-time lump
sum deposit to offset the housing loan
interest.

In a higher interest rate environment,

borrowers can capitalise on the situation by
using this account to earn higher interest
rates from the matching interest rates and
reduce the cost of financing. This account can
act as a hedging tool to mitigate high
borrowing costs in a rising interest rate
Back to Contents

Citibank Cash Management Account (CMA)

Citibanks CMA allows borrowers to enjoy
50% of the housing loan interest rate on their
deposits. The interest earned, also called an
adjustment by Citi-bankers, will offset the
housing loan interest payment. There is no
minimum deposit needed to maintain and no
lock in period on the deposit. However, the
deposit amount earning 50% of the housing
loan interest rate is capped at the loan
outstanding. So, if there is more deposits than
loan outstanding, the difference will not earn
any interest. Currently Citibank offers the
CMA to all SIBOR packages for any housing
loan above $800,000.

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SINGAPORE PROPERTY WEEKLY Issue 284

all of their SIBOR packages. Currently, they
have taken a decision to load an additional
Interest rate (spread) for those who opt for
the Smart Mortgage feature, and is available
for any loan amount above $500,000.

HSBC Smart Mortgage (SM)

Smart Mortgage allows 70% of the borrowers
deposit in the repayment account to enjoy an
interest rate that matches the housing loan,
while the remaining 30% of the deposit will
not earn any interest. The total interest
earned will offset the housing loan interest
rate. The percentage of the deposit earning
the matching interest rate is also capped at
the outstanding amount of the housing loan.
HSBC offers their Smart Mortgage Account to
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Standard Chartered Bank MortgageOne

Account (MOA)
MOA matches 2/3 of the deposit in the
repayment account to the housing loan
interest rate and the remaining 1/3 to enjoy
the banks prevailing rate, which is
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SINGAPORE PROPERTY WEEKLY Issue 284

currently at 0.25%. Similar to the other two
banks, there is neither a requirement for a
minimum deposit amount nor a stipulated
period for the fund to be in the account.
Likewise, MOAs interest matching is capped
at the housing loan outstanding amount, and
the remaining deposit will enjoy the prevailing
rate. The MOA account is available for any
completed private property or Priority banking
clients with an Under Construction private
property loan.

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The tables below compares the interest

earned between the three banks interest
offset feature. The examples are based on a
$100,000 deposit and example 1 and 2 are
using 1.5% p.a. and 3.5% p.a. as the housing
loan interest rate respectively. Although the
various packages have different spreads, we
are only comparing the interest-offset
mechanism between each bank in these
examples.
Illustration of interest earned at 1.5% loan
interest rate

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SINGAPORE PROPERTY WEEKLY Issue 284

Illustration of interest earned at 3.5% loan
interest rate

So which is better?
Citibank offers 100% deposit matching, but
only to 50% of the interest rate. As such, the
total interest offset is not maximised. The only
way that Citibank can surpass its competitors
in the interest offset account is if they offer a

Back to Contents

much lower housing loan interest rate in order

to have the lowest cost of financing among
the three products.
HSBC, on the other hand, does not provide
100% matching, but 70% of the deposit
enjoys 100% of the housing loan interest rate,
which is the highest amount of the deposit
matching out of the three banks. We must
bear in mind, however, that HSBC loads
additional margin on the mortgage rate for
this interest offset feature.
Standard Chartered seems to be more
balanced especially in moderate interest rate
environments.

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SINGAPORE PROPERTY WEEKLY Issue 284

One final point to note: To have a
comprehensive view on the suitability of these
products,
we must also take into
consideration the mortgage rate applied on
the property.

By Andrew Adriaan, Associate Director,

Redbrick Mortgage Advisory. Andrew spent
the last 7 years working with private bankers,
advising high net worth clients on their
mortgage matters. As a highly efficient
banker, he has won many sales awards
during his employment with one of the largest
lenders in Singapore. To get a free
consultation on your new loan or refinancing
needs,
please
head
to
www.propwise.sg/mortgage/

Back to Contents

Page | 8

SINGAPORE PROPERTY WEEKLY Issue 284

Non-Landed Residential Resale Property Transactions for the Week of Oct 17 Oct 21
Postal
District
1
2
3
3
3
3
4
4
5
5
5
5
5
7
8
9
9
9
9
9
9
9
9

Area
(sqft)
PEOPLE'S PARK COMPLEX
409
ICON
883
ALEXIS
409
QUEENS
1,195
TANGLIN VIEW
1,152
EMERALD PARK
990
CARIBBEAN AT KEPPEL BAY
883
REFLECTIONS AT KEPPEL BAY
1,044
THE PARC CONDOMINIUM
1,302
MONTEREY PARK CONDOMINIUM 1,389
FABER CREST
1,259
WEST BAY CONDOMINIUM
1,249
PARK WEST
1,130
THE BENCOOLEN
980
PARC SOMME
355
OUE TWIN PEAKS
549
OUE TWIN PEAKS
570
OUE TWIN PEAKS
1,055
OUE TWIN PEAKS
1,399
MARTIN NO 38
1,130
RIVERGATE
1,561
RIVERGATE
1,496
RIVERGATE
1,539
Project Name

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Transacted
Price ($)
515,000
1,150,000
683,000
1,450,000
1,280,000
975,000
1,400,000
1,500,000
1,585,000
1,520,000
1,048,000
1,020,000
778,000
1,140,000
540,000
1,617,000
1,654,800
2,780,500
3,567,450
2,393,000
3,128,000
2,885,000
2,890,000

Price
Tenure
($ psf)
1,259
99
1,303
99
1,670 FH
1,214
99
1,111
99
985
99
1,586
99
1,437
99
1,217 FH
1,095 999
832
99
817
99
688
99
1,164
99
1,520
99
2,946
99
2,901
99
2,636
99
2,549
99
2,117 FH
2,004 FH
1,928 FH
1,878 FH

Postal
District
9
9
9
10
10
10
10
10
10
11
11
11
11
12
12
14
14
14
14
15
15
15
15

Project Name
LEONIE SUITES
TRIBECA
GRANGE HEIGHTS
LEEDON RESIDENCE
RV RESIDENCES
CLIVEDEN AT GRANGE
LEEDON RESIDENCE
DRAYCOTT EIGHT
SPRING GROVE
SOLEIL @ SINARAN
PARK INFINIA AT WEE NAM
1 MOULMEIN RISE
PASADENA
THE INTERWEAVE
TREVISTA
NESS
THE SUNNY SPRING
EUNOS MANSION
THE ALCOVE
THE SHORE RESIDENCES
MEYER RESIDENCE
VIBES @ EAST COAST
ONE AMBER

Area
(sqft)
936
3,315
1,905
1,044
689
2,153
2,669
2,895
1,012
936
1,130
1,259
1,389
377
915
452
1,184
1,292
1,550
1,141
1,152
377
1,195

Transacted
Price ($)
1,450,000
5,100,000
2,430,000
2,360,000
1,521,100
4,500,000
5,150,000
5,200,000
1,470,000
1,730,000
1,968,000
1,828,000
1,450,000
595,000
1,180,000
530,000
1,038,000
880,000
950,000
1,725,000
1,731,275
520,000
1,630,000

Price
Tenure
($ psf)
1,548
99
1,538 FH
1,275 FH
2,260 FH
2,208 999
2,090 FH
1,929 FH
1,796
99
1,453
99
1,847
99
1,741 FH
1,451 FH
1,044 FH
1,579 FH
1,290
99
1,172 FH
877
FH
681
FH
613
99
1,512 103
1,503 FH
1,380 FH
1,364 FH

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SINGAPORE PROPERTY WEEKLY Issue 284

Postal
District
15
15
16
16
18
18
19
19
19
19
19
20
21
21
21
21
21
21
22
22
23
23

Area
(sqft)
EURO-ASIA LODGE
1,345
LAGUNA PARK
1,615
COSTA DEL SOL
1,561
AQUARIUS BY THE PARK
893
DOUBLE BAY RESIDENCES
936
LIVIA
1,410
KOVAN RESIDENCES
1,765
THE MINTON
2,250
TREASURE GARDENS
1,690
RIO VISTA
1,249
RIVERVALE CREST
1,130
THE GARDENS AT BISHAN
2,379
MAPLEWOODS
1,787
GARDENVISTA
1,345
THE STERLING
1,496
GARDENVISTA
1,249
CLEMENTI PARK
1,755
PANDAN VALLEY
2,142
LAKEHOLMZ
1,572
PARC OASIS
1,227
HILLINGTON GREEN
1,356
CASHEW HEIGHTS CONDOMINIUM 1,647
Project Name

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Transacted
Price ($)
1,400,000
1,450,000
1,905,000
832,888
968,000
1,030,000
2,050,000
2,188,000
1,330,000
960,000
788,000
2,050,000
2,480,000
1,700,000
1,800,000
1,488,000
1,700,000
1,930,000
1,250,000
950,000
1,380,000
1,480,000

Price
Tenure
($ psf)
1,041 FH
898
99
1,221
99
932
99
1,034
99
730
99
1,161
99
973
99
787
FH
769
99
697
99
862
99
1,388 FH
1,263
99
1,203 FH
1,192
99
969
FH
901
FH
795
99
774
99
1,018 999
899
999

Postal
District
23
23
23
27
28

Area
(sqft)
HILLVIEW REGENCY
904
GUILIN VIEW
861
MAYSPRINGS
915
YISHUN SAPPHIRE
1,195
SELETAR SPRINGS CONDOMINIUM 1,561
Project Name

Transacted
Price ($)
795,000
750,000
708,000
845,000
1,050,000

Price
Tenure
($ psf)
879
99
871
99
774
99
707
99
673
99

NOTE: This data only covers non-landed residential resale property

transactions with caveats lodged with the Singapore Land Authority.
Typically, caveats are lodged at least 2-3 weeks after a purchaser
signs an OTP, hence the lagged nature of the data.

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