By SIOW LI SEN

Hong Leong Finance (HLF) has slashed its HDB home loan rates in a bid to undercut the competition amid a low interest rate environment, but it seems some banks might have been even quicker on the draw.

Yesterday, HLF said its latest HDB home loan rates are 0.50 per cent lower than its last promotional rates.

It now offers variable rates at 1.33 per cent, 2.13 per cent and 2.83 per cent for the first, second year and third year respectively. The variable rates are based on a board rate which currently stands at 4.25 per cent. Its new two-year fixed-rate package charges 1.63 per cent and 2.63 per cent in the first and second year respectively, totalling 4.26 per cent.

But rival DBS said it too has new lower home loan packages applicable to both HDB and private properties. A DBS spokeswoman said the bank 'just' revised its home loan rates.

DBS's variable package charges the same 1.675 per cent based on three-month Sibor plus one per cent for every year of the loan. The three-month Sibor or Singapore interbank offered rate is 0.675 per cent. Borrowers can also opt for a two-year fixed rate at 1.88 per cent for both years which amounts to 3.76 per cent.

At OCBC, the variable rate for three years is the same 1.66 per cent each year and based on its board rate of 4.5 per cent. Those who want a two-year fixed can pay 1.99 per cent per year.

'OCBC Bank's home loan packages will remain competitive to respond to market conditions,' said Phang Lah Hwa, head of consumer secured lending, OCBC Bank.

HLF, Singapore's largest finance company, said the new rates apply until the end of the year and are for up to 80 per cent financing.

'The revision in rates is to ensure that our package is one of the lowest in the market,' said an HLF spokeswoman.

'We hope that with the new rates, our customers will continue to support us and allow us to capture a bigger slice of the HDB market which is presently very active and healthy,' she said.

HLF said customers who sign on with a minimum loan of $200,000 will also get a choice of KrisFlyer air miles or dining vouchers with five hotels in Singapore.

'There has been an increasing demand for HDB flats and we pride ourselves with moving with the market and the changing needs of our customers,' said Ian Macdonald, HLF president.

'Response to Hong Leong Finance's earlier home loan promotion has been very encouraging and we are confident that the new rates will perform just as well,' he added.

This article was first published in The Business Times.