Home loan curbs having some effect

[princess_morbucks]

http://www.straitstimes.com/breaking...lizing-tharman

Published on Jul 07, 2013
2:39 PM

By Royston Sim

Curbs on home loans are having some effect, with the market stabilising, said Deputy Prime Minister Tharman Shanmugaratnam on Sunday morning.

Commenting on the curbs which took effect on June 29, Mr Tharman said Singaporeans should stay fairly conservative when it comes to borrowing and noted that interest rates are certain to rise.

The home loan curbs require lenders to consider a borrower's total debt obligations. Banks cannot approve a loan if the monthly repayments of a buyer's total debt obligations exceed 60 per cent of his gross monthly income.

Mr Tharman was speaking on the sidelines of the Jurong Lake Run, which saw 15,000 participants. The run raised $140,000 for four beneficiaries including Lakeside Family Centre.

[Arcachon]

What happen when mortgage rate goes up and saving rate remain?

e.g. mortgage rate 3%, saving rate 0%.

Every dollar you save, you lost 3%? plus inflation ?

[princess_morbucks]

What happen when mortgage rate goes up and saving rate remain?

e.g. mortgage rate 3%, saving rate 0%.

Every dollar you save, you lost 3%? plus inflation ?

Can that happen?
I thought both should be in tandem?

[sillyme]

Can that happen?
I thought both should be in tandem?

sorry, take this opportunity to seek enlightenment. my loan is tagged to a certain discount against the bank's board rate (that the banker claimed have not changed for 5 years) and locked in for four years when my loan started, probably more than a year and a half from now. will the bank's board rate drastically be raised if interest rate goes up? my apologies if this sounded like a silly question but would appreciate any clarification. thanks in advance.

[lot286]

beware all these 'board' rate stuff .... like *A*BANK

[princess_morbucks]

If you have lock in the interest rate, it will not be affected during the duration of locked in period. After the locked in unit period usually the rates will become high n most of the time you will need to refinance or reprice the loan.
Those who opted for SOR or SIBOR will be affected when the interest rate fluctuates.

[LaFiestaOwner]

Ya, that's why I scared. Last week, about to sign my sales and purchase, get cold feet. Because my Condo still building, so I cannot lock in the rates. Anyway if raise, i think a lot of people will suffer also.

[amk]

Alamak at this day, still got ppl taking "board rate".
"board rate" means the bank can do ANY WAY it wants. market rate low, it can raise rate, market rate unchanged, it can raise, market rate looks like to change, it will rise faster. It basically does whatever it wants, no justification needed , just say "other costs".
And no, "LOCKIN" doesn't mean a thing on board rate. You are locked in for a "board rate" minus x% for 3yrs. The x% is "locked in", the "board rate" itself is not, it can and will change any time it wants.

Never, NEVER, take "board rate". Always take market reference rate like SIBOR, sor, swap.

To TS, the new loan policy was just out barely a week ago, he already declared "effective"... I think this is political and/or PR message only.

[mummy]

sorry, take this opportunity to seek enlightenment. my loan is tagged to a certain discount against the bank's board rate (that the banker claimed have not changed for 5 years) and locked in for four years when my loan started, probably more than a year and a half from now. will the bank's board rate drastically be raised if interest rate goes up? my apologies if this sounded like a silly question but would appreciate any clarification. thanks in advance.

There is a risk that board rate will go up, agree that it is not transparent at all and i think bank can even apply different board rate to different customers. Fixed rate independent of board rate is safest now as sibor and sor likely to go up soon.

[sillyme]

Ya, that's why I scared. Last week, about to sign my sales and purchase, get cold feet. Because my Condo still building, so I cannot lock in the rates. Anyway if raise, i think a lot of people will suffer also.

My condo is building too (or have yet started building actually). I think that's why I chose the board rate package as it allows me to lock in the discount against the board rate for 4 years though the board rate may be raised by the bank too but I did not have much choice, pending the rumors 3 mths ago on the MAS loan curb. Think interest rate will be creeping upwards, no doubt about that but it would affect all of us who picked up a loan. I would hope for the best & brave through the storm when it comes.

[sillyme]

There is a risk that board rate will go up, agree that it is not transparent at all and i think bank can even apply different board rate to different customers. Fixed rate independent of board rate is safest now as sibor and sor likely to go up soon.

My loan was for a new condo (yet to be built), so was not able to lock in the fixed rate or variable rate then. Just wanted to lock in a loan then as there was a rumor that MAS curb was forthcoming (which actually happened 3 mths later).

[sillyme]

beware all these 'board' rate stuff .... like *A*BANK

Thanks, I can only hope for the best now

[sillyme]

If you have lock in the interest rate, it will not be affected during the duration of locked in period. After the locked in unit period usually the rates will become high n most of the time you will need to refinance or reprice the loan.
Those who opted for SOR or SIBOR will be affected when the interest rate fluctuates.

Thanks for advice. This was my first loan.

[sillyme]

Alamak at this day, still got ppl taking "board rate".
"board rate" means the bank can do ANY WAY it wants. market rate low, it can raise rate, market rate unchanged, it can raise, market rate looks like to change, it will rise faster. It basically does whatever it wants, no justification needed , just say "other costs".
And no, "LOCKIN" doesn't mean a thing on board rate. You are locked in for a "board rate" minus x% for 3yrs. The x% is "locked in", the "board rate" itself is not, it can and will change any time it wants.

Never, NEVER, take "board rate". Always take market reference rate like SIBOR, sor, swap.

To TS, the new loan policy was just out barely a week ago, he already declared "effective"... I think this is political and/or PR message only.

Thanks for advice. Will take note when I refinance

[amk]

Thanks for advice. Will take note when I refinance

u r welcome.

there is some misconception on mortgage rates esp for fresh buyers. Ppl thought they can "lockin" some rate such that when market rate rises, they can still get the "low rate". This is wrong. your mortgage rate by and large track market rates or higher. Conceptually, no one should aspire to beat the market rates. The commercially equitable position at best is at market rate. You do not fancy a position where you can be x% below the market. When market rates rise globally, your rate will rise. The only choice you can make is, will you be just tracking the market i.e. rise fairly, or unfairly by banks giving them extra spreads. Giving "board rate" to bank gives the bank the option to do whatever they want.

[lot286]

do not confuse "LOCK IN " with "FIXED"....
always ask for fixed rates.

[radha08]

Thanks, I can only hope for the best now

u are not alone

[Cupcakes]

think sillyme took OCBC mortgage loan. I thought OCBC rate was quite good couple months back. 1st year 1.08%, 2nd yr 1.18%, 3rd yr 1.38%. Usually 1st 3yr impact is not great, 3 years later just refin. But looks like it will be quite tough to refin looking at the situation now. But who knows what will happen 3 years later...

[k00L]

A bank can hardly lose money by issuing board rate loan as bank can raise its board rate anytime to cover cost.

Whereas for sibor rate + 0.85% loan, the bank is making a fixed spread of 0.85% from you for rest of the tenor, and has to cover all unexpected costs e.g mortgage defaults , rise in capital charges, etc. Such costs could go over 0.85% of profit during credit crunch times

As a consumer, go for sibor loan. If you are a bank, issue board rate loan

[Ringo33]

A bank can hardly lose money by issuing board rate loan as bank can raise its board rate anytime to cover cost.

Whereas for sibor rate + 0.85% loan, the bank is making a fixed spread of 0.85% from you for rest of the tenor, and has to cover all unexpected costs e.g mortgage defaults , rise in capital charges, etc. Such costs could go over 0.85% of profit during credit crunch times

As a consumer, go for sibor loan. If you are a bank, issue board rate loan

there is no such thing as 100% fixed rate, if you read the fine prints, there will always a clause for the banks to make adjustment if they have to

[DMCK]

what was the highest rate when in the good time?

[mcmlxxvi]

what was the highest rate when in the good time?

2006 I paying 4.25% UOB.

[relax88]

Sian man....that means I cannot buy