A few years ago, I took up a mortgage package pegged to the Singapore Interbank Offered Rate (SIBOR), at a spread of 0.6 percent plus SIBOR.
The interest rate has just been revised to 0.85 percent plus SIBOR, with no explanation provided.
Though the bank reserves the right to review the interest rate from time to time and adjust it accordingly, to raise the spread by more than 40 per cent overnight is outrageous.
As the mortgage rate is SIBOR-pegged, the rising cost of funds is already passed on to borrowers, with the bank making a profit in the spread.
This is profiteering from the current uptrend in SIBOR, similar to the petroleum companies recently raising pump prices by more than the increase in petrol duties.
Borrowers with such SIBOR packages have no recourse and are at the mercy of the bank, making a mockery of a “fixed spread” agreement. Would the Consumers Association of Singapore or any relevant authorities comment on such an unfair practice?
This letter was written by Kelvin Lee.
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