Can you afford a 1% mortgage interest hike?

[Without_a_car]

Have you ask yourself this question?

[Mustank]

interest going up meh?

 

economy is bad. 安 lah! usa wont up interest one lah! sg also wont up one lah Take SOR package is good!

[Without_a_car]

nobody buy their bonds, sooner or later will have to raise the interest rate no?

[SimonTan]

If your property already on paper gain >$100,000 or even more especislly for private condos,house.

Then the 1% is actually a small sum that you will Willingly pay.

Not sure how much is the 1% on a say $600,000 loan. Maybe 100 extra per month?

That is peanuts lah. This extra cash layout over the next 2 years is only $2400 out of pocket.

Compared to the >$100,000 paper profit........I am sure many people will be so happy and willingly and even booast about the kachang-puteh amount being inconsequential over the huge profit margin!!

 

 

[Without_a_car]

If your property already on paper gain >$100,000 or even more especislly for private condos,house.

Then the 1% is actually a small sum that you will Willingly pay.

Not sure how much is the 1% on a say $600,000 loan. Maybe 100 extra per month?

That is peanuts lah. This extra cash layout over the next 2 years is only $2400 out of pocket.

Compared to the >$100,000 paper profit........I am sure many people will be so happy and willingly and even booast about the kachang-puteh amount being inconsequential over the huge profit margin!!

 

Paul Volchker days interest rate was 20%.

[Mustank]

better use cpf to buy house. at least you got a house. can stay can rent. what you wanna do with cpf marnie?

[SimonTan]

I think 95% or more people use their CPF to buy properties, many also have to double up with spouse to finance the properties.

It's not smart or not....it's the Normal thing for Singaporeans.

Because everyone thought of using CPF and don't care how it will keep pushing up the properties price.

That is why today we have inflated properties prices.....using invisible CPF monies!!

 

 

better use cpf to buy house. at least you got a house. can stay can rent. what you wanna do with cpf marnie?

 

[Without_a_car]

Will this be the pin that prick the bubble???

[Mustank]

yes i agree if we use cpf marnie, price will increase bec people paying with cpf dont feel the pinch

 

but what you wanna do with cpf marnie?

 

at least you buy house, you can stay or rent, up to you. immediately, you can get the satisfiaction from your cpf marnie

[Mustank]

if we increase interest rate, it has to go beyond 2.6% to be of any use. if not it is better to keep the manie in cpf account

 

if it goes 5%, it will deter people who needs a loan to buy house. but even if it goes 10%, it will not hit those who do not need a loan to buy house.

[Sabbie]

Should use 3.75% to calculate for affordability, as for interest rates, I doubt it is going up in the next one year

[Jasonjst]

If your property already on paper gain >$100,000 or even more especislly for private condos,house.

Then the 1% is actually a small sum that you will Willingly pay.

Not sure how much is the 1% on a say $600,000 loan. Maybe 100 extra per month?

That is peanuts lah. This extra cash layout over the next 2 years is only $2400 out of pocket.

Compared to the >$100,000 paper profit........I am sure many people will be so happy and willingly and even booast about the kachang-puteh amount being inconsequential over the huge profit margin!!

 

1% of 600K is 6K pa , 500 a month leh , slowly go up to 6% which become 3K a month ? Hoo ray all hell break loose and property tank 30% , your 800K property lost 240K . Now become paper lost of 120K ?

Can happen ? It happen before in the 90s .

[Without_a_car]

1% of 600K is 6K pa , 500 a month leh , slowly go up to 6% which become 3K a month ? Hoo ray all hell break loose and property tank 30% , your 800K property lost 240K . Now become paper lost of 120K ?

Can happen ? It happen before in the 90s .

 

you are getting ahead of the story

[Old-driver]

1% of 600K is 6K pa , 500 a month leh , slowly go up to 6% which become 3K a month ? Hoo ray all hell break loose and property tank 30% , your 800K property lost 240K . Now become paper lost of 120K ?

Can happen ? It happen before in the 90s .

Nothing is impossible... and I agree that every 1% on half a million loan will kill a lot of ppl along the way

[Without_a_car]

Nothing is impossible... and I agree that every 1% on half a million loan will kill a lot of ppl along the way

 

normally how many instalments you missed then bank will serve you notice?

[Darryn]

If your property already on paper gain >$100,000 or even more especislly for private condos,house.

Then the 1% is actually a small sum that you will Willingly pay.

Not sure how much is the 1% on a say $600,000 loan. Maybe 100 extra per month?

That is peanuts lah. This extra cash layout over the next 2 years is only $2400 out of pocket.

Compared to the >$100,000 paper profit........I am sure many people will be so happy and willingly and even booast about the kachang-puteh amount being inconsequential over the huge profit margin!!

 

er 1% on a $600,000 loan is $500 per month.

 

If your salary is $10,000 pm, your take home pay is going to be $9,000

 

Your Mortgage is already $2694 per month (3.5%, 30 years) meaning your cash top-up is (about) $1500

 

Say your expenses are roughly like this:

Car $1800

Food, Utilities and household $1500 (low)

Entertainment $600

Clothes $300

Kids $500

Maid $500

Sappork Parents $800

 

Just adding this up (and this is not comprehensive) you come to $7500 - that leaves you $1500 discretionary. The additional mortgage is fully 1/3 of your discretionary - that's a big whack.

 

It doesn't matter how much the property is going up in value, what matters is if you can service the loan.

[Darryn]

Must also remember that current global interest rates are at historical lows. Most people are paying in the 3-4% range right now for their mortgage.

 

I would guess that, even for Sinapore, a more realistic estimation would be 5-6% long term.

 

We were paying 8-10% on a mortgage in NZ - so just imagine what happens to a $600k mortgage when the interest rate climbs from 3.5% to 7%? That's an additional $1,750 just in interest per month.

 

And when that happens, what is going to happen to property prices? They are going to tank - a cautionary tale for the highly leveraged. This is what happened in the US.

 

People took loans at low interest rates - loans they couldn't afford at more "normal" rates - they thought it didn't matter because they could sell when the rate adjusted. It adjusted, but they couldn't sell as suddenly nobody could afford the new rates.

 

[Without_a_car]

Must also remember that current global interest rates are at historical lows. Most people are paying in the 3-4% range right now for their mortgage.

 

I would guess that, even for Sinapore, a more realistic estimation would be 5-6% long term.

 

We were paying 8-10% on a mortgage in NZ - so just imagine what happens to a $600k mortgage when the interest rate climbs from 3.5% to 7%? That's an additional $1,750 just in interest per month.

 

And when that happens, what is going to happen to property prices? They are going to tank - a cautionary tale for the highly leveraged. This is what happened in the US.

 

People took loans at low interest rates - loans they couldn't afford at more "normal" rates - they thought it didn't matter because they could sell when the rate adjusted. It adjusted, but they couldn't sell as suddenly nobody could afford the new rates.

 

time to pop the bubble in Asia?