Some local bankers will claim that their bank is safer They claim that foreign banks have a higher cost of borrowing, therefore will likely raise rates later.

For some, safer means a perceived safety in terms of financial strength of the bank.

All banks who are licensed to operate in Singapore have passed the intense scrutiny of Monetary Authority of Singapore.Regulatory oversight of the banks in Singapore is rather stringent with high Capital Adequacy ratio.

In terms of safety, Singapore’s banks regardless of local or foreign are quite solvent.
The rules and requirements for both the local and foreign banks are the same.

Ms Angelina Fernandez
Director (Communications)
Monetary Authority of
Singapore said 26 Seo 2008 (My paper). ”“Our regulations also require foreign-bank branches in Singapore to maintain a proportion of the assets of their Singapore branch in safe and liquid Singapore dollar-denominated and Singapore-domiciled assets.”
Depositors have first claim to the bank’s assets ahead of other debtors. Depositors will likely get part of their money back. Now, Singapore government guarantees the deposit of all deposit accounts in Singapore.

Are local banks really safer from raising lending rates

Do the so called “lower cost of funds really translate into lower lending rates for housing loan owners?

Firstly, while some people claim that local banks are safer from raising rates, they could not categorically pin-point why in a fact-based manner.

So who can we believe?

Secondly, do remember that whether a bank is local or foreign, they are nonetheless business entities. They do not owe you a favour so as not to raise rates if it is in their best interests to do so.

The only way to have reasonable rates is to have healthy competition amongst banks.

Many foreign banks have now obtained the QFB status. QFB stands for Qualified Full Bank. This means that they can obtain deposits and operate a full range of banking services in Singapore. That makes them no different from local banks, perhaps with the main difference being of scale.

Funding advantage

Banks such as DBS which is perceived to be the National bank have large depositor base because they have early childhood savings program. Many Singaporeans grew up knowing DBS as their first bank.

To do Singapore home loan comparison, the safety and solvency of the bank is not of critical concern, unless there is a risk of them recalling your loan.

The best safety measures falls on the shoulders of home buyers, property buyers, property investors. They should first consider whether they can afford the property before committing to it. As long as they are not over-borrowing, in case the bank asks for top up of cash or recalls the loan, other banks may be willing to take over.

Therefore we emphasize that safety should start from the time you buy your property and structure your home loan financing. Praying for, hoping for a bank to be a SAFE bank should be a secondary concern.

Therefore when you Compare singapore home loan, focus on a home loan meeting your personal requirements and cash flow needs and give yourself that safety first.

For Singapore home loans refinancing, it is the same case.

You cannot control how safe a bank will be, but you can control how safe you want to be.

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