SIBOR rates and home loan repricing

[Bluepica]

Just got a letter for revision of home loan interest rates (3.0 to 3.5%)

 

I'm thinking of doing a repricing.

 

But should I go for floating 0.75% + SIBOR rates (revised every 3months) (1yr locked in)

 

OR

 

1% + SIBOR rates (capped at 1.49% if SIBOR goes high) (locked in 3yrs)

 

Any suggestions?

[Akula]

1% + SIBOR capped at 1.49%, since SIBOR already at 0.3xx% now....

 

And will most prob trend higher....

[Jamesc]

Its always safer to have a cap.

 

[Mustank]

Its always safer to have a cap.

 

 

This James is sure funny guy!!!!!

[Sabbie]

Just got a letter for revision of home loan interest rates (3.0 to 3.5%)

 

I'm thinking of doing a repricing.

 

But should I go for floating 0.75% + SIBOR rates (revised every 3months) (1yr locked in)

 

OR

 

1% + SIBOR rates (capped at 1.49% if SIBOR goes high) (locked in 3yrs)

 

Any suggestions?

 

Depends whether you intend to stay or sell and don't mind the lock in, I will go for 1 yr lock in as anything can happen after 1 year, anyway sounds like DBS...lol....

[Vidz]

italian mafia become the biggest bank

doubt sibor will go anywhere

 

this is what the world is coming to..

[Jp66]

Depends whether you intend to stay or sell and don't mind the lock in, I will go for 1 yr lock in as anything can happen after 1 year, anyway sounds like DBS...lol....

hmmmm, so easy to recover 500K

[Sabbie]

hmmmm, so easy to recover 500K

 

huh, what 500K?

[Mustank]

Just got a letter for revision of home loan interest rates (3.0 to 3.5%)

 

I'm thinking of doing a repricing.

 

But should I go for floating 0.75% + SIBOR rates (revised every 3months) (1yr locked in)

 

OR

 

1% + SIBOR rates (capped at 1.49% if SIBOR goes high) (locked in 3yrs)

 

Any suggestions?

today newspaper say foreign banks paying higher than sibor for S$ deposit. Maybe they don have enough S$ to conduct their business so better stock up. Maybe they expect sibor to go beyond what they offering to these depositors.

 

[Yardo]

You also have to check if there is any penalty you have to pay to your financier if you switch to another.

[Pinobii]

Sibor to hit more than 2% by end-2016: OCBC

 

http://www.straitstimes.com/business/banking/sibor-to-hit-more-than-2-by-end-2016-ocbc?xtor=CS3-20

 

Homeowners with home loans pegged to the Singapore Interbank Offered Rate (Sibor) could be paying much more this time next year.

 

OCBC is forecasting that the three-month Sibor - to which many mortgage rates are pegged - could double and hit more than 2 per cent by the end of next year.

 

 

Sibor is influenced by US Federal Reserve rates and the Singapore dollar strength, among other factors.

 

OCBC Bank's head of treasury research and strategy, Ms Selena Ling, told The Straits Times: "Persistent market speculation of further Monetary Authority of Singapore easing, given dovish growth and subdued inflation and a strong US dollar, will translate to greater pressure on Singapore-dollar short-term rates, especially the Swap Offer Rate. Sibor will also tend to follow with a lag."

 

Ms Ling said at an OCBC Bank 2016 Outlook Briefing yesterday the Fed is likely to raise rates by at least 1 to 1.25 percentage points by late next year. In its November meeting minutes released last week, the Fed hinted strongly it will next month make its first rate hike in about a decade. Ms Ling said the economy could see a "slow growth range" of between 2 and 3 per cent" for this year and next year.

 

Rate hikes and China's slowing growth would have already been taken into account in the growth numbers. Old growth engines, such as manufacturing, would remain in the doldrums, but new engines of growth, like financial services and information and communications technology, are coming on stream.

 

Although core inflation could be fairly subdued next year, do not expect persistent deflation, she said .

 

OCBC Bank head of research Carmen Lee said Singapore equities, which have not been performing very well this year, could get cheaper next year, with a price-to-earnings forecast of 12.1 times.

 

Since the financial crisis in 2008, the market has been trading at an average of 14 to 15 times earnings.

 

Expect to see high net worth investors looking into Singapore stocks too, Ms Lee added.

 

Volatility is still going to be very much in play and the whole region is still very much dependent on China.

 

Expect slower growth in the banking sector, and the property sector to remain challenging with the current cooling measures.

 

Healthcare could be one sector to look out for although valuations are expensive, Ms Lee said. She also noted Reits have been corrected since July and are yielding close to 7 per cent. She said: "December will taper off but it could also be a good time to accumulate some of the quality stocks."

[Ktglfc]

Unless we are ultra rich and can pay off housing in cash, then we are always bound by this high class loans....

 

Hopefully folks here have calculated this higher interest in their installments, and not tax too much in your everyday livelihood ..

[A_korusawa]

at this time where every investments becomes vague, and the world finance is not very positive . . .

those capital ventures will scavenge any reasons just to justify for their prices hikes . . . including banks

honestly, the hype of US adjusting rates started early this year.

to date, it has been postponed again while the presidential transition is early next year . . .

yet, many banks had already adjusted their rates . . .

 

now, they even 'play up' other financial setbacks, countries' slowdowns, other requirements as stated (since the abovementioned is no longer justifiable) just to justify for the hike.  its obvious coz other revenues depleted, so raise interest rates lohhhhh . . . . 

 

simple, if there's suddenly a change on the current financial directives, will the banks readjust the rates or reverse the sibor numbers...... Fat Hope!

 

its no point saying 'dun loan lohhh' . . .

why would he/she not clear the bank loan if he/she can afford for a bigger loan???

its just too bad that locals have not much options and bank choices . . .

 

I guess what's worth discussing here is various options when refinancing your loan:
- continue with variable rates on the 3mth sibor locking for 1 yr

- start with variable rates on the 3mth sibor locking for 2 yr

- go with fixed rates on 2 yrs lock, and refinance again  . . . .

- stick to fixed rates on 5 or 10yrs lock . ..

- are there any other options???

 

which one will you choose & why???

 

 

 

 

Edited November 26, 2015 by A_korusawa

[Showster]

OCBC and Citibank are the worst of the lot. They can change loan conditions at whim and may not stick to original terms. If can avoid do try to avoid them. Now its just justifying their rates.

Edited November 26, 2015 by Seohster

[Matrix0405]

When/If Sibor hits 2%, the going is going to get rough. Those renting with yield 3.5%,  go negative cash flow. Those with million dollar loan, looking at $4K a mth. Lose tenant or job, buay tahan.

[CH_CO]

oh , isnt it too late to worry about it? For those which has consistently boasted that they actually "saved" taking a floating loan would now be worried as the credit cycle shifts towards a tightening lending requirements and raise interest rates.

 

What u guys should do now is actually to think about how to actually reduce damage by first locking in your loan interest and second securing your tenants for at least the upcoming 2 years.

 

As china RMB devalues itself in near future , we might see futher inflations coming from goods , indirectly benefiting the consumers but indirectly the biggest exporter is also the biggest consumer at least for us.

 

The positives is , demand changes to real demand .

 

As reduction in foreign investors/speculators would mean prices of properties is on real demand/supply status , rentals would probably remain stable if not better to the people renting thus curbing property speculations as restrictions on foreigners on rental. This is likely to reduce supply of the rental units.

 

Banks is likely to face a reduction in liquidity but to me i think is for the better as loose credit conditions is slowly getting controlled.

Edited November 26, 2015 by CH_CO

[Showster]

When the banks tell you SIBOR rising, do you think they are telling you better don't borrow, or do you think they are asking you to switch to fixed rates?

 

And if you agree with me that they are asking you to switch to fixed rates, it tells you their confidence in the  SIBOR level in the long run.

 

For your reference: both banks previously switched rates without anything close to a warning.

Edited November 26, 2015 by Seohster

[CH_CO]

If they are actually trying to "frighten" people to convert , they would have done it long ago.

 

Bank strategies has being laid out long long time ago and any hikes in interest would long be discussed in meetings with the policy makers.

 

For your info , this clause is already around more than 15 years ago. Only local banks try not to adjust for various reasons. Revaluations and hiking of interest rates without notice has being around long long time ago.

 

In loan agreements, the parties are free to insert an interest rate adjustment clause that entitles the bank to step up interest rates following an increase in refinancing costs.

 

It would be silly for someone which is above 35 to even blame the two banks in the picture for doing such a thing when you will be aware that such a thing actually happened before. You know how to make money , the banks don't? Try telling the petrol companies not to charge so much on petrol despite the low crude prices.

 

Anyway what do a table wiper know , u guys should do due dillengence and do your own knowledge finding.

Edited November 26, 2015 by CH_CO