“When you take a housing loan from HDB, you will enjoy a “concessionary” interest rate. This concessionary interest rate is pegged at 0.10% above the prevailing CPF Ordinary Account (OA) interest rate, and may be adjusted in January, April, July, and October, in line with CPF interest rate revisions.” HDB website
CPF (OA) rate has been fixed at 2.5% since 1999. So making it 2.6% for almost 20 years
A typical HDB loan of 200k for 25 years at 2.6% would mean a total repayment of 272k which gives HDB a net gain of 72K which is almost all profit… or 36% of your original loan amount and nearly 25% of the typical flat purchase price.
HDB is a government Stat board so who makes the profit? It should go in to the national coffers like any other income so in effect it is like a tax.
By comparison Commercial Mortgages are based on SIBOR + X% which except for a small period around the 2007 Crisis have been below 2% for the last 20 years and has averaged 1.66% making Private Banking rates much lower than the HDB rate for 2 decades. By choosing Commercial you would have had a nearly 20k saving in the same period over the last 20 years compared to an HDB loan.
So for the privilege of leasing an HDB you pay more than the private rates, the government gets a 72k windfall (Hidden Tax), and if you sell your HDB you have to pay back in to CPF an amount equal to CPF used (deposit and loan payments) plus the interest it would have earned if you had not touched it to be locked up for as long as the government deems fit as they believe you are incompetent to manage your own money.
All for something that is priced to include land cost of land that you never own and reverts to zero dollars for the building when the lease expires.
Do they really care for you? Or are they laughing all the way to their bank.