We are taking the low SIBOR rates for granted

[lifeafter41]

Outlook for Singapore’s banking system remains negative: Moody’s

Moody’s Investors Service says its the outlook on Singapore’s banks remains “negative” over the next 12 to 18 months. “Because the banks have rapidly grown both their domestic and cross-border loans in recent years, we expect a moderate increase in problem loans, as interest rates rise, due to the United States Federal Reserve’s expected raising of policy rates, and as asset prices are likely to fall.”
http://www.todayonline.com/singapore/outlook-singapores-banking-system-remains-negative-moodys

Interest rate upside used to be positive for banks but quality of loan portfolio is lacklustre, going forward.

Just take a quick glance, UOB now above 23. Though ocbc is around 9+.

 

[zhihau]

what share you average down? dun tell me ocbc??!!

silvery moon~~~

 

[Runifyouhaveto]

Just take a quick glance, UOB now above 23. Though ocbc is around 9+.

OCBC had a 2-for-1 share-split about ten years ago.

So effectively, OCBC is also about $20 by now without the share-split.

Now the biggest headache is Wing Hang............
Wing Hang May Fall 40% If OCBC Hindered, Credit Suisse
http://www.bloomberg.com/news/2014-...-if-ocbc-bid-hindered-credit-suisse-says.html

 

[Runifyouhaveto]

Malaysia Raises Rate First Time in 3 Years
Bank Negara Malaysia increased the overnight policy rate by 25 basis points to 3.25 percent
http://www.bloomberg.com/news/2014-...hmark-rate-for-first-time-in-three-years.html

 

[Runifyouhaveto]

Many people think that it makes sense to maximize (lower-interests) housing loans and use the leverage for investment elsewhere.

It makes sense, provided that you:
A. Enjoy fixed rates for your housing loans (fixed costs)
B. Enjoy secured returns without the risk of capital loss (eg. low-risk bonds).

B minus A = about 3% of returns.
But most people will not be contented such mediocre returns, so they strayed into more dangerous bets/nets.
If you do so, you must run away fast before big boys will pull the nets.

 

[lifeafter41]

Many people think that it makes sense to maximize (lower-interests) housing loans and use the leverage for investment elsewhere.

It makes sense, provided that you:
A. Enjoy fixed rates for your housing loans (fixed costs)
B. Enjoy secured returns without the risk of capital loss (eg. low-risk bonds).

B minus A = about 3% of returns.
But most people will not be contented such mediocre returns, so they strayed into more dangerous bets/nets.
If you do so, you must run away fast before big boys will pull the nets.

My thoughts is that fixed rate is usually for the first few years (5 years) and will resume to variable rates.

Rates at 1% for 1.5kk and 3.5% is big difference at 37.5k
While I believe rates increases will be gradual, one must be prepared to make payment to minimise the principal. Else, it's going to be big problem.

 

[Runifyouhaveto]

More failing to repay mortgages on time - The number of borrowers with delinquent mortgages - accounts that have not been paid for more than 30 days - hit 4,186 in May, up 20 per cent from the 3,340 a year earlier, the Credit Bureau told The Straits Times.
http://j0035001-1.blogspot.sg/2014/07/more-failing-to-repay-mortgages-on-time.html

 

[Runifyouhaveto]

My thoughts is that fixed rate is usually for the first few years (5 years) and will resume to variable rates.

Rates at 1% for 1.5kk and 3.5% is big difference at 37.5k
While I believe rates increases will be gradual, one must be prepared to make payment to minimise the principal. Else, it's going to be big problem.

Yes sir. The first part was just a boarder assumption. For private, rates cannot be fixed beyond 3-5 years.

If money for principal-repayments are channelled to other uses, few are contended with ultra-safe financial assets due to their low returns. In the end, they got trapped when the market unwind. Therefore you are right that one must be prepared and have the ability to make payment to minimize principal when rates are edging higher.

 

[lifeafter41]

Yes sir. The first part was just a boarder assumption. For private, rates cannot be fixed beyond 3-5 years.

If money for principal-repayments are channelled to other uses, few are contended with ultra-safe financial assets due to their low returns. In the end, they got trapped when the market unwind. Therefore you are right that one must be prepared and have the ability to make payment to minimize principal when rates are edging higher.

Yes, before tdsr and absd was implemented, have known of people that bought multiple properties at launch, with 20% down. 1.5kk cash, bought 3 property with 20 to 30% down.

Eg, property 1 at 1.2kk, 20% down + 3% stamp duty is 276k
Property 2 at 1.5kk, 20% down + 3% stamp duty is 345k
Property 3 at 2kk, at 20% down + 3% stamp duty is 460k

Total 1.081kk

From what I know, 1st property bought at 1k/ psf, sold at 1.3k/psf. Gross is 360k
2nd property, now rented out
3rd property , TOP not too long ago, Reno now and waiting to rent.

Understand just upgrade his car to a x5, with the profit made.
Now I know why Singaporean able to quickly change their car so quickly.
Easy come, easy go.

 

[Runifyouhaveto]

The borrowers face delinquent mortgages before any spike in interest rates. We can only attribute this phenomenon to another 2 reasons:

- Poor yields/demand for residential rentals, just sufficient to cover loan-interests and maintenance fees.

- Speculators who bought their 2nd or 3rd properties in the last 2 years, will face Seller's Stamp Duties if they offload immediately. By definition "Taxes" are meant to be imposed on profits, but Stamp Duties (SD) apply to overall selling price. As such, this group of delinquent buyers are now contemplating whether to realize their paper losses + SSD or hang-on for a while more.

 

[SNTCK]

i am still serving housing loan with 1% sibor interest rate.i able to settle my housing loan but i prefer to use the money to generate dividend from share, which can give me yield 4-5%

now thinking to buy another property. should i?

 

[Runifyouhaveto]

i am still serving housing loan with 1% sibor interest rate.i able to settle my housing loan but i prefer to use the money to generate dividend from share, which can give me yield 4-5%

now thinking to buy another property. should i?

barclays asked you to wait for at least another 18 months.
5% downside in second half this year
another 5-15% next year
http://sbr.com.sg/residential-prope...-should-continue-crashing-until-2015-barclays

 

[lifeafter41]

The borrowers face delinquent mortgages before any spike in interest rates. We can only attribute this phenomenon to another 2 reasons:

- Poor yields/demand for residential rentals, just sufficient to cover loan-interests and maintenance fees.

- Speculators who bought their 2nd or 3rd properties in the last 2 years, will face Seller's Stamp Duties if they offload immediately. By definition "Taxes" are meant to be imposed on profits, but Stamp Duties (SD) apply to overall selling price. As such, this group of delinquent buyers are now contemplating whether to realize their paper losses + SSD or hang-on for a while more.

Yes, from an investment perspective most buy for capital gains. Rental yields are just to service the loan.

As for ssd, most gain would be profit by Ira.

In February 2010, the Government imposed a seller’s stamp duty (SSD) on sellers who buy (or acquire) residential properties on or after 20 February 2010 and sell (or disposed of) them within one year of acquisition.

The amount of SSD is computed based on the same rates as the buyer's stamp duty.

On 30 Aug 2010, the Government further announced that SSD will be payable on residential properties which are acquired (or purchased) on or after 30 Aug 2010 and disposed of (or sold) within 3 years of acquisition. The amount of SSD for the holding period of 1 year is computed based on the same rates as the buyer's stamp duty, but will be reduced to 2/3 and 1/3 of the amount of buyer's stamp duty for holding period of 2 years and 3 years respectively.

On 13 January 2011, the Government announced the extension of the holding period for imposition of SSD on residential properties from 3 years to 4 years based on new rates. The new SSD rates will be imposed on residential properties which are acquired (or purchased) on or after 14 January 2011 and disposed of (or sold) within 4 years of acquisition, as follows :

Holding period of 1 year : 16% of price or market value, whichever is higher
Holding period of 2 years : 12% of price or market value, whichever is higher
Holding period of 3 years : 8% of price or market value, whichever is higher
Holding period of 4 years : 4% of price or market value, whichever is higher
Properties acquired before 20 Feb 2010 will not be subject to SSD.

 

[Runifyouhaveto]

MAS announces proposals to regulate financial benchmarks
MAS censured 20 banks last year after it found that 133 traders from those firms had tried to manipulate the SIBOR, the swap-offered rates and foreign exchange spot benchmarks. For now, the central bank intends to designate the SIBOR and Swap Offered Rates as key benchmarks. “The proposed regulatory framework will deter manipulation of financial benchmarks and enhance the integrity of benchmarks set in Singapore,” said MAS.
http://www.channelnewsasia.com/news/business/singapore/mas-announces-proposals/1287754.html

 

[Runifyouhaveto]

Total business loans were down 0.3 per cent in June to S$367 billion, yanked down mainly by a fall in loans to the manufacturing and trading sectors. In May, business loans grew 1.5 per cent from a month ago.
Consumer loans were a shade stronger, up 0.6 per cent in June to S$230 billion. This compares with the 0.5 per cent increase in consumer loans in May.
http://www.businesstimes.com.sg/bre...lat-sing-dollar-loan-growth-june-mas-20140731

During the Hari Raya long weekend, RUN flipped through the whole of last week's classified ads; there were significantly more bank HDB-sales.

 

[Runifyouhaveto]

Since the beginning of this thread, 3M-SIBOR has increased to 0.89% and some banks increased their board rate by 0.7% to 0.8% for the first time in recent memory.

Some home loans are based on a discount to board rate, eg. (Board minus 2.5%), they are misrepresented as "fixed-rate" loans, because the banks never adjust the board rate for >5 years. Now, some of these home owners are unhappy to pay a little higher.

 

[lifeafter41]

Since the beginning of this thread, 3M-SIBOR has increased to 0.89% and some banks increased their board rate by 0.7% to 0.8% for the first time in recent memory.

Some home loans are based on a discount to board rate, eg. (Board minus 2.5%), they are misrepresented as "fixed-rate" loans, because the banks never adjust the board rate for >5 years. Now, some of these home owners are unhappy to pay a little higher.

Ah run, welcome back. Where have you been to?

 

[thinkorsink]

bro run, i like to tap your wealth of info., please see your pm. cheers...

Since the beginning of this thread, 3M-SIBOR has increased to 0.89% and some banks increased their board rate by 0.7% to 0.8% for the first time in recent memory.

Some home loans are based on a discount to board rate, eg. (Board minus 2.5%), they are misrepresented as "fixed-rate" loans, because the banks never adjust the board rate for >5 years. Now, some of these home owners are unhappy to pay a little higher.

 

[Runifyouhaveto]

Ah run, welcome back. Where have you been to?

hi good brother, hahaha, ya some thought i went to prison
Ah RUN have been running away from life.
Been a prisoner of my own life

 

[Runifyouhaveto]

bro run, i like to tap your wealth of info., please see your pm. cheers...

Thank you sir, i replied.