OHR, which stands for OCBC Home Rate, is a new mortgage peg introduced by OCBC in October 2017. It replaces the bank’s fixed deposit-linked home loan rate (OCBC FDMR) and provides borrowers with option to choose from fixed and floating rates for their home loan. Let’s understand what OHR is and how it works.
As defined by the bank, OHR is the long-term average of 1-month and 3-month SIBOR (Singapore Interbank Offered Rate). SIBOR is the rate at which banks offer funds to other Singaporean banks in the interbank market. So, based on the SIBOR average, the OHR is currently set at 1.00% p.a.
In case of fixed deposit-linked rates, the home loan rate is linked to the interest rates offered by the banks on their fixed deposit accounts. As the fixed deposit account rates increase, the home loan rates also increase. So, in a way, this type of home loan rate is controlled by the banks. OHR, on the other hand, is based on SIBOR, which makes it more of a market-determined loan benchmark and, therefore, more transparent.
You can choose from a fixed rate and a floating rate package, depending on your requirements.
Fixed rate package: This package provides you protection from interest rate fluctuations for 2 years by locking in a fixed rate of interest on your loan. As of 29 January 2018, the OHR (2-year fixed) was 1.85% p.a. (OHR of 1% p.a. plus a spread of 0.85%).
Floating rate package: Floating rate loans are generally cheaper than fixed rate loans and are subject to change from time to time. As of 29 January 2018, the first year OHR floating rate was 1.60% p.a. and second year OHR floating rate was 1.65% p.a.