Home loans may creep up next year

[sleek]

Home loans may creep up next year: analysts (http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1154169/1/.html)
By Linette Lim | Posted: 19 September 2011 2131 hrs

SINGAPORE: Interest rates in Singapore may rise - from their lowest levels in 40 years - as early as March next year, according to analysts.

They say home loan refinancing is surging, but bank profitability and the rising cost of funds offshore may force the banks' hand.

Banks could be forced to raise their home loan interest rates as early as six months from now.

Low rates have hurt their profitability and they will not bear the razor-thin margins for ever.

Dennis Ng, CEO of HousingLoanSg.com said: "Banks may be forced to increase the interest margin on their housing loans. (With the three-month SIBOR at 0.35 per cent, even if they add in an interest margin of 0.6 or 0.7 per cent, the total interest rate would be about one per cent - and that, to a lot of banks, means that profitability is affected."

This means that home loans, which are currently in the range of 1 to 1.2 per cent, may go up as much as 0.3 percentage points by early next year. That is even if the Singapore Interbank Offered Rate, or SIBOR, component of home loans remains low.

Banks such as UOB, DBS and Maybank have stopped offering Swap Offered Rate (SOR) pegged loans as SOR rates turned negative earlier this year, while foreign banks have to deal with potentially higher borrowing costs offshore.

Tai Hui, regional head of research, SE Asia, Standard Chartered Bank, said: "It's also worth noting that the low interest rate environment will not last forever, even though it may be for the next year or two.

"So I think it's interesting to find an opportune time to lock in low interest rates once we start to see some degree of stabilisation and some degree of return in confidence."

The low interest rate environment has fuelled a resurgence in home loans refinancing.

According to loans consultancy HousingLoanSG, home loans refinancing rose 30 per cent in the first half of this year, compared to the same period a year ago.

Borrowers have been particularly attracted to packages that protect them from future SIBOR increases. For example, DBS Bank has a loan pegged to the three-month SIBOR, with a spread of 0.85 per cent for the first three years. This means that the interest rate is capped at 1.49 per cent for the first three years.

It is loans growth that is keeping banks profitable and not the rates they charge, which is giving borrowers an unrealistic sense of cheap money.

Analysts say a better gauge of affordability is to factor in rates of 3 or 4 per cent - an indication of where rates are headed as early as next year.

- CNA/al

[danielchow]

I can tell you first hand UOB and OCBC have started to increase their interest margin effectively now

[kane]

what is uob's?

[devilplate]

I can tell you first hand UOB and OCBC have started to increase their interest margin effectively now
Normal spread shd go back to around 1%

Anyway i realised those low low spread package only applicable to new launch which to me its a total gimmick.....currently for resale is about 0.8% spread for resale without lock in

[evergreen]

Borrowers have been particularly attracted to packages that protect them from future SIBOR increases. For example, DBS Bank has a loan pegged to the three-month SIBOR, with a spread of 0.85 per cent for the first three years. This means that the interest rate is capped at 1.49 per cent for the first three years.


If it's pegged to SIBOR, if SIBOR rises to 1%, the interest rate will be 1.85%.
Why was it reported as capped at 1.49%?

[devilplate]

If it's pegged to SIBOR, if SIBOR rises to 1%, the interest rate will be 1.85%.
Why was it reported as capped at 1.49%?
If rise to let say 2%, u only pay 1.49%

This is by far the best package i ever seen

Anyone got the details? How many yrs lock in?

[mygeemeel]

If rise to let say 2%, u only pay 1.49%

This is by far the best package i ever seen

Anyone got the details? How many yrs lock in?

Sibor 2%?? :tsk-tsk:

[devilplate]

Sibor 2%?? :tsk-tsk:
If remain low let say 1%, u pay 1% and nothing more....best package indeed

[hyenergix]

Interest rate is the Archilles' heel of today's boom in sales. If the rate rise is fast next year coupled with retrenchments in the finance and manufacturing industries, we should see some firesales.

[ysyap]

Interest rate is the Archilles' heel of today's boom in sales. If the rate rise is fast next year coupled with retrenchments in the finance and manufacturing industries, we should see some firesales.Until then, where else can we park our money in this super volatile economy, waiting for falling durians later? Gold is already so high, too late to enter? Stocks in simply too risky for low risk appetite investors. :confused:

[DC33_2008]

I thought the rise in interest rate refers to the spread. This affects only new housing loan package. How to get firesales with existing units? They are still on attractive spreads. Unless SIBOR/SOR rates increase. Fixed rate package will be smiling. Am I right? :confused:
Interest rate is the Archilles' heel of today's boom in sales. If the rate rise is fast next year coupled with retrenchments in the finance and manufacturing industries, we should see some firesales.

[devilplate]

I thought the rise in interest rate refers to the spread. This affects only new housing loan package. How to get firesales with existing units? They are still on attractive spreads. Unless SIBOR/SOR rates increase. Fixed rate package will be smiling. Am I right? :confused:

yes i also believe so. somemore new purchase kena 4yrs SSD.....they will die die hold on to their units

but the spread at most increase back to 1% from 0.8% now for resale w/o lock in.....

this article is like urging ppl to take up lock in package:hell-hath-no-fury:

[DC33_2008]

Prepare for more sales from today. :)
yes i also believe so. somemore new purchase kena 4yrs SSD.....they will die die hold on to their units

but the spread at most increase back to 1% from 0.8% now for resale w/o lock in.....

this article is like urging ppl to take up lock in package:hell-hath-no-fury:

[gn108]

Totally agree. Buyers who are stretching based on current mortgage rates might will sweat once SIBOR/bank margins increase.

If retrenchments happens, market will throw up some opportunities.



Interest rate is the Archilles' heel of today's boom in sales. If the rate rise is fast next year coupled with retrenchments in the finance and manufacturing industries, we should see some firesales.

[Lovelle]

Totally agree. Buyers who are stretching based on current mortgage rates might will sweat once SIBOR/bank margins increase.

If retrenchments happens, market will throw up some opportunities.


read somewhere, there is one guy who are waiting to buy mount sinai or meyerise. He better act fast....:)

[gn108]

SSD is an artificial measure - it will cut both ways.
I agree with you, buyers will die die try to hold on - at least till their SSD ends.

But if sentiment is weak, supply will not be absorbed. If rates increase or rental yields decrease, then the SSD will keep the market depressed for longer as there will be weak holders selling as soon as their SSD is over.
The OCR is the most vulnerable from this.


yes i also believe so. somemore new purchase kena 4yrs SSD.....they will die die hold on to their units

but the spread at most increase back to 1% from 0.8% now for resale w/o lock in.....

this article is like urging ppl to take up lock in package:hell-hath-no-fury:

[devilplate]

SSD is an artificial measure - it will cut both ways.
I agree with you, buyers will die die try to hold on - at least till their SSD ends.

But if sentiment is weak, supply will not be absorbed. If rates increase or rental yields decrease, then the SSD will keep the market depressed for longer as there will be weak holders selling as soon as their SSD is over.
The OCR is the most vulnerable from this.

3yrs later mah

i still believe ppty got another 15-20% upside b4 the big crash happen:D

[gn108]

I'm less bullish - maybe 5-10%.
Maybe no big crash - just revisit 2010 prices.

But the risk has increased - mortgage rates, supply issues and uncertainity with Europe/US - if that leads to layoffs here.

So would you buy now? If collectively, people say "I wait" - where can the market really go up from here?



3yrs later mah

i still believe ppty got another 15-20% upside b4 the big crash happen:D

[devilplate]

I'm less bullish - maybe 5-10%.
Maybe no big crash - just revisit 2010 prices.

But the risk has increased - mortgage rates, supply issues and uncertainity with Europe/US - if that leads to layoffs here.

So would you buy now? If collectively, people say "I wait" - where can the market really go up from here?

i am waiting to sell only.....current px level not much meat to drop.....so hold on to all my gems and sell only if px go up somemore

not so silly to buy now and kena 4yrs ssd la.....

whahahaha

one thing abt int rate- unlikely to go up if US/EU remains dark......so likely to rise only when dark clouds r cleared which is gd for ppty too

[gn108]

Yup - agree ...if they are gems hold esp if you can afford too.
Its the marginal punters that must be vigilant ...the late-comer normal wage earner, with high leverage with condos that need renters to pay their mortgages. Some of these still buy with SSD coz their buddies did.



i am waiting to sell only.....current px level not much meat to drop.....so hold on to all my gems and sell only if px go up somemore

not so silly to buy now and kena 4yrs ssd la.....

whahahaha

one thing abt int rate- unlikely to go up if US/EU remains dark......so likely to rise only when dark clouds r cleared which is gd for ppty too

[East Lover]

Hong Kong, two banks to raise interest rates suddenly drop of property transactions

http://www.f-paper.com/?i966438-Hong-Kong-two-banks-to-raise-interest-rates-suddenly-drop-of-property-transactions

Xinhua News Agency, Hong Kong, September 19 - HSBC and Bank of China suddenly announced on Friday by interest rates, the rapid decline of Hong Kong property market transaction...

[East Lover]

Hong Kong, two banks to raise interest rates suddenly drop of property transactions

http://www.f-paper.com/?i966438-Hong-Kong-two-banks-to-raise-interest-rates-suddenly-drop-of-property-transactions

Xinhua News Agency, Hong Kong, September 19 - HSBC and Bank of China suddenly announced on Friday by interest rates, the rapid decline of Hong Kong property market transaction...


加息急冻港楼市
（香港） (2011-09-19)

（联合早报网讯）香港文汇报报道，上周五汇丰及中银突然宣布加按息，急冻市场一二手物业成交。
http://www.zaobao.com.sg/wencui/2011/09/hongkong110919e.shtml

[bargain hunter]

"Published September 20, 2011
http://www.businesstimes.com.sg/mnt/static/image/ax/c.gif
Tight liquidity seen further lifting HK mortgage rates


(HONG KONG) Tightening liquidity in Hong Kong may continue to push up mortgage rates in the Chinese territory, the head of HSBC Holdings plc in Asia said yesterday, potentially damping already weak real estate sentiment even further.

HSBC revised its mortgage rate upwards over the weekend to 2.3-2.7 per cent over the Hong Kong interbank offer rate (Hibor), up from 1.8-2.3 per cent previously, which HSBC Asia chief executive Peter Wong said was a reflection of the rising cost of capital."

How come 2.3% + HIBOR while ours is 0.8% + SIBOR. Any expert can share if its possible for our 0.8 spread to become 2.3?

[McKinnon]

becoz deposits and loans are skewed to the yuan, this dries up the supply of hk dollars and forces banks to increase the spread.



"Published September 20, 2011
http://www.businesstimes.com.sg/mnt/static/image/ax/c.gif
Tight liquidity seen further lifting HK mortgage rates


(HONG KONG) Tightening liquidity in Hong Kong may continue to push up mortgage rates in the Chinese territory, the head of HSBC Holdings plc in Asia said yesterday, potentially damping already weak real estate sentiment even further.

HSBC revised its mortgage rate upwards over the weekend to 2.3-2.7 per cent over the Hong Kong interbank offer rate (Hibor), up from 1.8-2.3 per cent previously, which HSBC Asia chief executive Peter Wong said was a reflection of the rising cost of capital."

How come 2.3% + HIBOR while ours is 0.8% + SIBOR. Any expert can share if its possible for our 0.8 spread to become 2.3?

[devilplate]

"Published September 20, 2011
http://www.businesstimes.com.sg/mnt/static/image/ax/c.gif
Tight liquidity seen further lifting HK mortgage rates


(HONG KONG) Tightening liquidity in Hong Kong may continue to push up mortgage rates in the Chinese territory, the head of HSBC Holdings plc in Asia said yesterday, potentially damping already weak real estate sentiment even further.

HSBC revised its mortgage rate upwards over the weekend to 2.3-2.7 per cent over the Hong Kong interbank offer rate (Hibor), up from 1.8-2.3 per cent previously, which HSBC Asia chief executive Peter Wong said was a reflection of the rising cost of capital."

How come 2.3% + HIBOR while ours is 0.8% + SIBOR. Any expert can share if its possible for our 0.8 spread to become 2.3?

For sg, spread highest at 1.75% rite for the past 5yrs? Average about 1-1.25%