WHY IS HDB CHARGING HIGHER INTEREST RATES THAN PROFIT DRIVEN BANKS?

The Housing and Development Board’s (HDB) concessionary loan is designed to assist the lower-income group afford a HDB flat.

Its interest rate is expected to be lower than those for bank loans, which are designed to make a profit mainly from the higher-income group, whose members do not qualify for the HDB’s housing loans.

Ironically, banks have been offering lower interest rates for the past few years and even guarantee to charge a rate below 2.6 per cent.

For example, the POSB HDB Loan rate is 1.88 per cent per annum, with a cap of 2.5 per cent for at least eight years.

The HDB concessionary rate should be lower, considering the responsibility of providing a more affordable housing loan for the low income.

This letter was written by Wong Boon Hong.