To the delight of new home buyers, a fierce home loans war has broken out between DBS Bank and United Overseas Bank.

The prize: financing the purchase of at least 1,225 homes being offered in the year’s first two new-property launches.

Both banks are slugging it out with a zero-per-cent spread under their fixed-deposit home-loan rate (FHR) packages aimed at projects under construction, with no lock-in period and a one-time free conversion for a limited time only.

DBS’s regular FHR package charges an all-in rate of 1.4 to 1.5 percent.

The zero percent spread FHR packages applies until the property project receives its temporary occupation permit (TOP), which is typically in three to four years.

Based on a S$1 million loan with a 25-year tenure, this works out to a monthly installment of S$448.80 in the first year, rising to S$1,795.21 in the fourth year as loan disbursement rises with the stages of construction.

Under DBS’s special promotion package, the 0.6 percent interest rate is based on its 18-month FHR package; in UOB’s package, the 0.65 percent is based on its 36-month FHR.

The spread for the DBS loan is 1 per cent upon the property project receiving its TOP. For UOB, the spread for the first year after TOP is 0.9 per cent, and in subsequent years, 0.95 per cent.

Last weekend, some 200 homes were sold at the first new launch of the year at the 505-unit Clement Canopy, a new condominium in Clementi Avenue 1.

This weekend, the 720-unit Grandeur Park Residences will be launched. The development, a five-minute walk from Tanah Merah MRT station, opened its show flat a week ago, pulling in some 10,000 people.