CIMB Bank makes U-turn on floor rate following customer backlash
A group of over 100 CIMB customers had banded together and set up a website where they expressed their anger over the bank’s plan to raise the mortgage floor rates on 18 May.
CIMB Bank has decided to keep the floor rate for mortgages tied to the Singapore inter-bank offered rate (SIBOR) and swap offer rate (SOR) at 0.1%, after earlier plans to increase it to 0.9% was met with objections among customers, reported TODAY.
“We factored in that the market’s cost of deposits has fallen, hence allowing us to lower our deposit rates and cost of deposits so that we can maintain our floor rate at 0.1%,” said Victor Lee, Chief Executive Officer of CIMB Singapore.
“We thank our customers for their feedback, and we sincerely apologise for the inconvenience caused.”
Read: What SIBOR Rates Mean for Your Home Loans And Why You Should Track It (2020)
A group of over 100 CIMB customers had banded together and set up a website where they expressed their anger over the bank’s plan to raise the mortgage floor rates on 18 May.
The bank had moved the planned hike to 1 January next year.
“Nobody would expect — in the middle of a pandemic as interest rates began to fall — CIMB would suddenly inform all their customers that the floor rate would now be 0.9% rather than 0.1%,” noted the website, adding that the bank offered “no justification” for the hike.
The beleaguered customers found each other via social media. They took issue with a clause within the standard terms and conditions of the bank, which enables CIMB to change interest rate at its discretion.
Related: Home Financing Strategies For Managing Cash Flow Amidst COVID-19 Pandemic
A customer, who wanted to be identified only as Mr Singh, described the clause as “just fundamentally wrong”.
“The main issue is the principle (behind the hike),” said the 57-year-old who had already paid off the bulk of his $300,000 housing loan.
A 30-year old doctor, who wanted to be identified only as Dr Ong, shared that he had just obtained a $750,000 loan in March for his executive condominium before he received the letter about the hike in April.
Dr Ong, who expects to pay “two to three times” more interest with the planned hike, is upset that he has to deal with such issue while working on the frontlines.
“All of us are doing our part (during the pandemic) but it feels like the bank did not honour its contract … It’s quite unreasonable,” he said.
Meanwhile, CIMB revealed that it is offering its customers a two-year fixed rate of 0.9% or a three-year fixed rate of 1.10% to mitigate the fluctuations of the present volatile interest rate environment.
“This will give our customers peace of mind for the next three years, allowing them to plan their finances accordingly for the immediate three years,” said Lee.
“We are offering the lowest fixed rates for our existing customers on the SIBOR and SOR packages as of today.”
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
