Last month, EON Bank unveiled their revolutionary home loan package that is pegged to the fixed deposit rate, something that is unheard of. iProperty.com spoke to Tracy Pan, head of mortgages and secured business, Group Consumer Banking, EON Bank about this.

iProperty: Please briefly explain the Super Easi 123 Home Loan Fixed Deposit (HLFD) package.

Tracy: On 3 November, we introduced EON Bank’s most transparent home loan package which is pegged based on a different reference rate. It uses the 12 month fixed deposit rate (FDR) + 1.25% which forms an effective rate of 3.75% for the loan package. Why we call it the most transparent package is because everyone knows what is fixed deposit unlike base lending rate where there are many components that form it.

iProperty: How does this new package complement EON Bank’s existing home loan packages?

Tracy: In terms of offerings, we are still providing high margin of financing which is up to 90 to 95 percent subject to the eligibility of the applicants. The HLFD package is targeted at only properties costing RM200,000 and above, as well as targeted at completed and refinancing properties. For the refinancing aspect, we have a simple process of application called easy documentation. Because customers will have an existing track record for refinancing loan purposes so we need is just the customer’s IC and a copy of the previous letter of offer. The loan tenure is up to 30 years or age 70, whichever comes first.

The mechanism of HLFD is similar to that of the BLR (Base Lending Rate)-Home Loan Rate. The processes are the same such as the interest computations and calculations on a daily basis. On top of that there is also flexibility as we have Super Easi 123 Flexi features to complement this new HLFD package. So customers get a very transparent and competitive rate, as well as the flexibility of the option of withdrawal from a current account.

iProperty: Wouldn’t the addition of a new product be more confusing for customers as they already have to figure out fixed and floating rate packages, while the latter has BLR, KLIBOR and now FD to choose from?

Tracy: It will not be confusing, as everyone knows what is a fixed deposit rate. Take BLR for example, people know that home loans are pegged to that, but they might not know what the components of BLR are that will affect its fluctuation. For FDR, it is displayed in banking halls and currently the board rate is 2.5% now.

iProperty: How much does the FDR usually fluctuates? When was the last change?

Tracy: If you compare it to BLR, FDR is more stable and this offers more predictability to consumers. The last change in FD rate was in February this year from 3.7% to 2.5% and the former rate has been in existence since 2006. 3.7% can be considered the highest 12-month FDR.

iProperty: On to our last question, what are EON Bank’s expectations on this new home loan package?

Tracy: We aim to achieve total sales of RM200 million within the first three months.

iProperty.com thanks Tracy Pan for taking time off to share with us their new Super Easi 123 Home Loan Fixed Deposit Package. To find out more information on the package, head on to EON Bank branches or visit their website on www.eonbank.com.my.