HSBC unveils equity-linked home loan

HSBC has unveiled a first-in-the-market equity-linked home loan package in which customers could receive quarterly cash rebates over two years – at no additional cost.

There is also no lock-in period for the new package – and cash rebates given out are not subject to claw back if the home loan is redeemed, the bank said in a media release.

The loan package, open to all new and existing HSBC Premier customers in Singapore, charges an interest rate of Sibor+1.1 per cent throughout the loan tenure, but also offers the opportunity to receive potential cash rebates for two years.

The cash rebate will be granted in each quarter if the equity index to which the home loan package is pegged – in this case, the Morgan Stanley Capital International Singapore Free Index (SGY) – hits or exceeds 130 per cent of a specified barrier level on each valuation date. This occurs on the first trading day of every quarter.

Eligible customers will then receive in that quarter a cash rebate of 0.25 per cent of their outstanding loan, which will be credited into their home loan repayment account.

If the SGY index closes below 130 per cent of the barrier level on each valuation date, no cash rebate will be paid out.

Either way, HSBC said there will not be any cost to customers relating to the performance of the index.

Sebastian Arcuri, head of HSBC Singapore’s personal financial services, said the package was designed to ‘recognise and reward’ customers for their dedicated relationship with the bank.

‘Through this new and innovative home loan offer, we want to enable them to capitalise on market opportunities and earn potential cash rebates on their home loans, which they can use in any way they want,’ he said. ‘We’re confident that this initiative will further strengthen the HSBC Premier proposition and give our Premier customers even more value and reasons to bank with us.’

The package is applicable to both new and refinancing loans for completed properties with a temporary occupation permit obtained with a minimum loan of $200,000.

‘With the economy showing signs of improvement, our new proposition may prove to be a timely opportunity for customers to benefit from the recovering equity market,’ said Mr Arcuri.

Source: Business Times, 2 Nov 2009