According to the World Bank, the 2016 interest rate cap, coupled with an overall Non-Performing Loan (NPL) ratio of 12 per cent, led banks to tighten their credit standards and offer variable rate loans
, locking out the middle to low-income would-be homeowners.
As regards persons who have obtained variable rate loans
, they will not be affected by this decision, especially since APTBEF has decided not to pass on the new key rate to customers of banks that have already contracted housing loans before the end of December 2018.
The 100 basis-point increase in the fed funds rate since September 2017 has had a positive impact on our variable rate loans
and our interest-earning deposits.
Rising interest rates will likely increase costs for new small business loans, existing variable rate loans
and credit cards.
The first interest rate rise in 10 years, last November, has already impacted home buyers on variable rate loans
. And, as fixed rate deals expire, borrowers can expect new mortgages to be more expensive.
The increase over the prior year quarter is due to growth in its average loan balances to USD2.13bn and an increase in the yield on loans to 3.82%, again primarily driven by commercial loan growth as well as higher rates on variable rate loans
Among commercial lenders, DBS is the clear leader, with a range of products including fixed and SIBOR-linked variable rate loans
, as well as HDB loans that are cheaper than those available directly from HDB for the first five years.
Some banks here are charging homeowners interest rates of up to 4.5% on variable rate loans
despite these institutions being able to obtain money for as little as 1%.
BMO Bank of Montreal (NYSE: BMO) (TSX: BMO) has said that it will support small business customers by reducing its pricing by 0.50 percent on new variable rate loans
under the Canada Small Business Financing Programme.
Farm Plus Financial specializes in providing agriculture real estate based farm loans ranging from variable rate loans
, to fixed rate loans, to lines of credit that may be used for farm operating and expansion purposes.
The "Hybrid Loan" is unique and combines favoured features of both fixed and variable rate loans
in that it minimizes the amount of total interest paid over the life of the loan relative to longer term fixed rate products, and it reduces the size of monthly payments compared with shorter term fixed rate products, it aid.