Then, there is Letter published in Today Voices Voices regarding Citibank’s raising the loan’s spread again unilaterally (see below):
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Nothing to stop bank from raising loan margins?
FROM OH ENG LEE - MARCH 31
In June 2010, I took a mortgage that was marketed and signed as having the Singapore interbank offered rate (Sibor) plus 0.65 per cent as the interest rate throughout the loan tenure.
This month, I received a letter stating that Citibank is revising the rate to Sibor plus 0.85 per cent.
When I called the bank, I was told only that it is adjusting to market trends and that the small print in the contract allows for this.
So, the bank has invoked the clause without any good reasons other than it can legally do so. What would stop it then from raising the spread to 1 or even 1.5 per cent next year just because it could?
The Monetary Authority of Singapore or the Consumers Association of Singapore should do something, as this is unfair to consumers.
“
And then more stinging comments from forumers:
“
Now we have more information. It appears that the bank is giving excuses, like:
"adjusting to market trends and that the small print in the contract allows for this."
It appears that the bank in question may have pushed to secure more of such loans at that time with seemingly attractive terms BUT with no intention to keep to their side of the agreement (and to honour their attractive terms) and they believed that they "small print in the contract" could allow them to do this?
Why is Consumer Association of Singapore (CASE) NOT DOING ANYTHING about such unfair contract to the consumers that is contravening the CPFTA (Consumers Protection and Fair Trade Act)?
“
A second Letter was then published in Today (see below):
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Should banks be allowed to adjust rates at their discretion?
FROM NG EE LAINE - APRIL 1
I took up a mortgage in 2011, with the effective interest rate being the one-month Singapore Interbank Offered Rate (SIBOR) plus 0.68 per cent for the first year and thereafter, as well as a minimum interest rate of 0.8 per cent.
The bank’s facility letter also stated: “Interest rates are all subject to review and may be adjusted from time to time depending on prevailing market conditions. The bank will not be giving advance notice to the borrower for any changes.”
Now, I have been informed that my mortgage interest rate “will be revised to one-month SIBOR plus 0.85 per cent” after March 31.
While I understand that my mortgage interest rate would be subject to SIBOR changes, this move by the bank seems contrary to the agreement in the facility letter.
The question for the Monetary Authority of Singapore is whether banks are allowed to adjust their margin at their total discretion.
Also, can such a clause as “the bank will not be giving advance notice to the borrower for any changes” in the interest rate be legally imposed by a financial institution?
“
And attracted more comments:
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Now, the below letter didn't say why that bank in question has the right to adjust the spread.
The statement "“Interest rates are all subject to review and may be adjusted from time to time depending on prevailing market conditions." we would just interpret it as changes to the SIBOR rate and nothing else. In no where did their mortgage loan agreement says that they can change the "spread" value right?
So, can Monetary Authority of Singapore (MAS) please answer the question:
"The question for the Monetary Authority of Singapore is whether banks are allowed to adjust their margin at their total discretion?."
(when there is no such term clearly spelled out in the mortgage loan main contract)
“
Then there is a third Letter on the same bank (is it Citibank?) published in Today Voices (see below):
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Banks profiteering from uptrend in SIBOR
FROM KELVIN LEE JIE - APRIL 1
A few years ago, I took up a mortgage package pegged to the Singapore Interbank Offered Rate (SIBOR), at a spread of 0.6 per cent plus SIBOR.
The interest rate has just been revised to 0.85 per cent 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. (“Home owners hit as Sibor rises to highest in seven years”; March 13) 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?
“
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