Owners and buyers of completed or resale private properties can apply for a new mortgage with a 1.63 per cent interest rate.
Personal finance portal MoneySmart.sg will offer an OCBC Bank loan from Monday to Feb 29.
The fixed deposit-linked package is pegged to a rate of 0.65 per cent plus 0.98 per cent for the first three years on a mortgage of $500,000 and above.
The promotional package is linked to the OCBC 36-month fixed deposit mortgage rate, which has typically risen much slower than the key benchmark Sibor and swap offer rate.
After the first three years, the rate will switch to 1.5 per cent plus the 36-month fixed deposit mortgage rate.
There will also be a one-time free option to convert the loan to another package or to refinance the mortgage if the 36-month rate increases at any time.
There is a two-year lock-in period, and applicants refinancing an existing mortgage will also get a $2,000 cash rebate on approval to help defray legal expenses.
Applications can be made only on the MoneySmart.sg website, and there is no administrative fee.
MoneySmart said a $1 million home loan over 30 years on a package of 1.25 per cent tagged to the current three-month Sibor of 1.25 per cent would mean a total annual interest of $24,742.
However, on the 1.63 per cent promotional rate, the annual interest paid will be $16,106, leading to savings of $8,636 in the first year.
Mr Baey Ee-Qiang, MoneySmart.sg's mortgage head, said in a statement: "Based on the current spike in Sibor trends, home loan consumers would already be paying close to 12 per cent more on their monthly payments compared with early last year."
The three-month Sibor, known as the Singapore interbank offered rate, is a benchmark interest rate widely used to price mortgages.
Most housing loans offered by banks are floating-rate packages, but more people are choosing to refinance their mortgages by linking them to fixed deposit rates. This means the repayment rate is directly related to the interest banks pay cash depositors.
Mr Baey said MoneySmart.sg has seen substantial consumer interest in fixed deposit-linked mortgages, with more than 60 per cent of applicants taking up such packages, with the rest opting for a fixed rate.
Interest rates here are set to keep rising in tandem with rising rates in the United States.
Swiss private bank UBS expects the three-month Sibor, now at 1.25 per cent, to hit 2.2 per cent over the next 12 months.
This article was first published on Feb 13, 2016.
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