We are taking the low SIBOR rates for granted

he current interest rates swaps are approximately:
1 Year: 1.1%
2 Years: 1.5%
5 Years: 2.2%
10 Years: 2.70%

There are three recent trends:
- Emergence of Singapore Saving Bonds
- Higher FD rates
- Resumption of issues for retail bonds

Currently the gap between 1-Yr IRS and 10-Yr IRS is about 1.1% (2.7% minus 1.1%)
I speculate that these 3 factors will increase competition for short-term liquidity in the financial system, we might see the gap between 1-Yr IRS and 10-Yr IRS to be reduced. I am quite sure about this.
Of course, this assumption is not valid if there are major macro-economic developments.


I am not trained in Economics, but economists term it "flatter yield curve" when the difference between 1-YR and 10-YR IRS is narrowed
It hints that the benefit of taking flexible-rate 3M SIBOR home loan diminishes, going forward
 
GG789 said:
my housing interest rate...up from 1.1% to 1.7%
Click to expand...

aiyah GG789 can afford lah, 0.6% increment is kachang puteh :D

Runifyouhaveto said:
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.
Click to expand...
 
Last edited:
GG789 said:
what i can afford, i still serving hdb loan 280k..
280k*0.6% *35 yr

a lot of money, u know???
Click to expand...

No sir,
I assume you pay off your loan principal evenly across 35 years (420 months)

This is additional interests that you pay for a 0.6% hike
Remaining Months:420 Principal Balance: $280000.00 Additional Interest Paid: $140.00
Remaining Months:419 Principal Balance: $279333.33 Additional Interest Paid: $139.67
Remaining Months:418 Principal Balance: $278666.67 Additional Interest Paid: $139.33
:
:
:
Remaining Months:3 Principal Balance: $2000.00 Additional Interest Paid: $1.00
Remaining Months:2 Principal Balance: $1333.33 Additional Interest Paid: $0.67
Remaining Months:1 Principal Balance: $666.67 Additional Interest Paid: $0.33

Total Additional Interest Paid for 35 years = $29470
Total Additional Interest Paid per day = $2.3068

$2.30 a day nia, GG789 can one lah.
Your problem is the long duration of your loan.
 
Runifyouhaveto said:
No sir,
I assume you pay off your loan principal evenly across 35 years (420 months)

This is additional interests that you pay for a 0.6% hike
Remaining Months:420 Principal Balance: $280000.00 Additional Interest Paid: $140.00
Remaining Months:419 Principal Balance: $279333.33 Additional Interest Paid: $139.67
Remaining Months:418 Principal Balance: $278666.67 Additional Interest Paid: $139.33
:
:
:
Remaining Months:3 Principal Balance: $2000.00 Additional Interest Paid: $1.00
Remaining Months:2 Principal Balance: $1333.33 Additional Interest Paid: $0.67
Remaining Months:1 Principal Balance: $666.67 Additional Interest Paid: $0.33

Total Additional Interest Paid for 35 years = $29470
Total Additional Interest Paid per day = $2.3068

$2.30 a day nia, GG789 can one lah.
Your problem is the long duration of your loan.
Click to expand...

everyone also serving hdb loan so long what. any problem?

or should i use my all cpf(OA） + cash to settle the outstanding hdb loan?
like that, i will be very broke:(
 
GG789 said:
everyone also serving hdb loan so long what. any problem?

or should i use my all cpf(OA） + cash to settle the outstanding hdb loan?
like that, i will be very broke:(
Click to expand...

Historically, I agree everyone mostly takes up the 2.6% HDB loan and max. the loan duration. The historical average for SIBOR is between 2-5% in my memory. When SIBOR is trading above 1.5%, there is absolutely nothing wrong for taking a long loan from HDB because 2.6% loan is considered very very very cheap when SIBOR is 2-5%.

Besides, back then, people cannot choose bank loans for HDB loans. When SIBOR collapses below 1% in recent years, then risk-takers like GG789 decides to take up bank loans for HDB. Nothing wrong also, and your current 1.7% bank loan is also lower than 2.6% HDB loan. In financial context, you are still positively rewarded for your risk at this moment.

However, if you are a risk-taker, you will not want to be exposed to risks for an extended period of time. There is a saying in chinese, "If you keep going to the mountains, eventually you will run into the tiger one day".
This is why, the prudence ones who are exposed to bank-loans are less likely to loan 35years and have the firepower to reduce their loan exposure within a shorter notice when interest rates trend upwards.




I wish to take this opportunity to share the story of a PMET who bought a condo 6 years ago.
His timing was very good, his property value shot up a lot by now.
He was enjoying flexible 1.8 to 2.7% flexible rates for his loan in the first 5 years (depending on SIBOR).
However, he lost his job at the end of last year, coincidentially, the offer rates for 5-years ended.

Without an income, he couldn't refinance and stuck with the same bank, paying NON-PROMOTION Board Rates of 4.5-5.4% in the past 8 months.

His only choice now is to sell the condo, and resettle his family.
This is a true story.
 
I think that PMET can still make a profit out of it eventhough he needs to resettle his family.
 
gingerlyn said:
I think that PMET can still make a profit out of it eventhough he needs to resettle his family.
Click to expand...

Yes, his timing is very good.
Makes a little less now by offloading his condo but still better than facing a 5% board rate for housing loan at this moment.
5% is unbelievable, yet it is already happening. No income = cannot refinance.
 
Runifyouhaveto said:
Yes, his timing is very good.
Makes a little less now by offloading his condo but still better than facing a 5% board rate for housing loan at this moment.
5% is unbelievable, yet it is already happening. No income = cannot refinance.
Click to expand...

sorry, if factoring loan interest for 6 yrs, still making profit?
 
Bank lending in Singapore down 1.1% in April: MAS
http://www.businesstimes.com.sg/banking-finance/bank-lending-in-singapore-down-11-in-april-mas
Business loans were down 1.8 per cent to S$357 billion from a month ago. Lending was hurt by weaker trade loans. There was also no growth in construction lending - the single-largest lending segment for business loans.

Consumer lending dipped 0.1 per cent to S$237 billion compared to March, hurt by a deeper fall in credit card loans. This comes amid new regulations for unsecured lending which will set in soon.
 
Run: Check with you if all shares in Singapore can do scrips dividends? Or only selected shares.
 
Runifyouhaveto said:
definitely still got.
Click to expand...

Assuming he bought condo at 900psf/1,200sq.ft/1.08kk
Now sell at 1300psf profit at 480k.

Buy 5 room hdb, at 500k, use cpf to 300k and loan the remaining 200k.
Pocket the 480k profit.

I will be very happy if I were him.
1/2 million in my pocket, laughing away liao.
 
lifeafter41 said:
Assuming he bought condo at 900psf/1,200sq.ft/1.08kk
Now sell at 1300psf profit at 480k.

Buy 5 room hdb, at 500k, use cpf to 300k and loan the remaining 200k.
Pocket the 480k profit.

I will be very happy if I were him.
1/2 million in my pocket, laughing away liao.
Click to expand...

but it is still disheartening to offload condo because kids can enjoy the condo facilities
 
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