ST : POSB discount pledge for home loans

May 4, 2010

POSB discount pledge for home loans

0.1 percentage point off first-year interest rate if HDB loan approval not within 60 mins

By Gabriel Chen

IN A first for the banking industry here, POSB is dangling a small discount off the first-year interest rate if it fails to grant approvals for HDB home loans within 60 minutes of completing an initial appraisal.

In its latest effort to rejuvenate the so-called people's bank, POSB yesterday launched a '60-minute promise'.

Customers applying for a home loan simply have to complete and return the necessary documents via e-mail or fax between 9am and 3pm from Monday to Friday.

These include income documents such as the latest income tax notice of assessment. They are also required to submit a mortgage loan application form, the option-to-purchase form (for new purchases), and the loan statement of account (for loans refinancing from HDB).

Once the application is received and deemed satisfactory (this will take a few hours), the customer will get an SMS informing him the 60-minute period has started and another SMS when the letter of offer is ready.

The customer can then proceed to the POSB branch of his choice to sign the letter of offer.

POSB promises customers 0.1 percentage point off the first-year interest rate if the letter of offer is not ready in 60 minutes.

Assuming there are no problems with the application, a POSB customer who submits the documents in the morning should be able to sign the letter of offer the same day.

Mr Koh Kar Siong, managing director and head of POSB, said this is all part of the bank's ongoing initiatives to improve its efficiency and provide greater convenience to customers.

'Providing our customers with a quick turnaround time, giving them the approved letter of offer within 60 minutes is our service promise of enhancing their banking experience with us,' he said.

Some other banks can issue the letter of offer within a day too, though the difference is that POSB is underscoring its commitment by dangling an interest rate discount if they cannot deliver within a certain timeframe.

Citi, for example, offers customers in-principle online approval for a mortgage loan within 60 seconds of an application.

Upon obtaining the in-principle approval, if the customer can submit the necessary documents early in the day and fulfil the required criteria, a letter of offer can be prepared the same day.

OCBC Bank is another example. More than 80 per cent of its HDB home loan customers have received an approval and letter of offer within 30 minutes, if the applications were straightforward and the documents were in order.

Mr Leong Sze Hian, president of the Society of Financial Service Professionals, cautioned home buyers to first consider their circumstances and if they can afford to service the mortgage, before snatching a quick deal.

The initiative appears to be in line with DBS Group Holdings chief executive Piyush Gupta's strategy to beef up the POSB franchise.

He has signalled an intention to 're-create the full service relationship where the POSB client sees us not only as a place to put their savings in but also to get their mortgage, unsecured financing and simple investment products'.

gabrielc@sph.com.sg