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Why does HDB charge a higher rate on mortgage compared to banks?
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HDB charges an interest rate of 2.6% on mortgages. The banks charge a lower interest rate. 

Why is this the case? Is it better to take a loan from the bank or from the HDB?

The interest rate charged by HDB is 0.1% higher than the interest rate paid on the CPF ordinary account. Currently, this rate is 2.5%. So, the interest rate charge by HDB is 2.6%.

The interest rate charged by the bank depend on their cost of fund. Currently, banks pay an interest rate of less than 1% on fixed deposit. So, the banks are able to offer mortgage loans on HDB flats are a lower rate than HDB.

The cost of funds to the banks is now at a very low rate. This situation may be changed at any time. If the banks have to pay higher interest rate on deposits, they will increase the rates on their mortgages.

The banks do not lock their low interest rate for the full term of the loan. The agreement probably allow the bank to revise the interest rate after giving a few months notice. Even if the interest rate is locked at the current low rate, it will only apply for just a few years. 

HDB owners who take a loan from the bank has to take the risk that the interest rate can go up to a higher level, i.e. higher than 2.6%, if the general level of interest rate is increased in the future.

Given this trade-off, which is better? Is it better to take a loan from HDB at 2.6% p.a. or to take a loan from the bank and enjoy the current low interest rate?

It is likely that the interest rate will remain low for many years. Interest rate globally has been at a very low level, due to the high level of government borrowings to stimulate the economy. Their action is described as "quantitative easing".

Most governments are likely to maintain the low interest rate. So, it should be quite safe to go for a bank loan.