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    Default Property 2006

    Property 2006
    Published October 12, 2006

    A brighter outlook

    By UMA SHANKARI

    Prices in the property market are rising with a seemingly unstoppable momentum. And the trend appears to be holding true for all sectors -- residential, office, retail and hotel.

    The office and hotel markets, in particular, seem set to do well. Given the tight supply situation for both hotels and office space, rents should continue to escalate.

    Right now, occupancy of prime Grade A office space is at an all-time high and new supply is not likely to come onstream anytime soon. While the upcoming Marina Bay Financial Centre is expected to boost prime office supply in Singapore significantly, tenants can only start moving in in 2010. In the meantime, rents are on their way up, and should soon match their 1996 peak. Rentals at some developments are already well on their way, with rents at the upcoming One Raffles Quay hitting $10 per sq ft per month.

    The same holds true for the hotel industry. After years of settling for rates well below those in other major cities, hotel operators are beginning to nudge up room rates. If tourism targets set by the Singapore Tourism Board are met, the demand for hotel rooms is likely to surge -- allowing hoteliers here to achieve their dream of pushing rates up even higher.

    To date, however, the most buoyant aspect of the property market has been the high-end residential segment. Both foreign and Singaporean buyers have been snapping up multiple units in much-publicised luxury projects, such as St Regis Residences and Ardmore II.

    But whether this momentum can last remains to be seen. There are always fears that buyer interest for such upmarket developments can wane.

    Much better for developers, and the Singapore economy as a whole, will be a recovery in the mass-market residential market. But while everyone seems optimistic that the mass market will eventually pick up, no-one can say for sure when this will happen.

    Right now, the boom in the high-end residential segment seems to have had little impact on the rest of the residential market.

    But having said that, it is hard to judge the performance of the mass market due to the small number of projects being released by developers, who are afraid to put out too many too soon. Recent launches that have sold well, such as The Centris at Jurong West, have been attributed to pent-up demand by observers.

    But this is set to change soon, with a respectable number of mass-market residential projects soon to be launched. If these see good demand as well, everyone will be happy.

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    Default On a high

    Property 2006
    Published October 12, 2006

    On a high

    The recent surge in the luxury residential market has been fuelled by both local and foreign buyers, as NICHOLAS MAK and MICHELLE TEE explain


    SINGAPORE'S high-end private residential real estate market has been in the limelight for the past year and a half, with increased interest and transaction volume that can be traced back to when the green light was given for the development of two integrated resorts (IRs) in Singapore. Other factors include the stable recovery of the economy and the general perception that the rise in Singapore's property market lags other regional markets.

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    Sky high: Luxury developments in the high-end residential sector include The Boulevard Residence on Cuscaden Walk (above)

    This report will analyse the non-landed residential property market, particularly the high-end segment, consisting of homes in the prime districts of 9, 10, and 11 as well as new hotspots like Sentosa Cove (in District 4) and the financial district and New Downtown area (District 1). Both foreigners and Singaporeans can participate in this segment without restrictions, whereas foreigners require approvals from the government to purchase landed properties. We will examine the period from Q2 2005, when the government announced there would be two IRs, to Q3 2006.


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    Foreign vs local buying

    There is a perception that most of the buyers of high-end homes are foreigners. In fact, although foreign buyers have a strong presence, the majority of the buyers are Singaporeans.

    Foreign buyers have always been active participants in the local property market. They tend to be more active in the high-end residential sector than the broad market. Out of the total non-landed residential properties purchased by foreigners in the past 1 1/2 years, 52 per cent of these properties were located in the prime districts of 1, 4, 9, 10 or 11. Some developments that attracted a high proportion of foreign buyers include St Regis Residences, The Sail @ Marina Bay and Rivergate.

    In the past 18 months, there was an almost equal percentage of foreign buyers purchasing high-end properties in the primary and resale market. The primary market refers to homes sold by developers, usually still under construction, while the resale market refers to units in completed developments sold by private owners. It can be inferred that the number of foreign buyers purchasing properties in anticipation of future returns is similar to the number buying properties for immediate occupation or rental returns.

    Foreign investors who seek to profit from short-term capital gains usually prefer to buy properties that are under construction, as they do not need to pay the full sum of the price upfront. Many of these buyers also prefer the progressive payment method to the deferred payment scheme, because of the 2-3 per cent discount for choosing the former.

    Interestingly, the majority of the foreign buyers in the high-end market were not Permanent Residents (PRs), while most of the foreign buyers in the rest of the island were Singapore PRs. The mix of foreign buyers in the high-end market also differed from that in the whole of Singapore. UK, US, Indonesia, Korea and Australia nationals were more active in the high-end market than in the rest of the island. Their individual market share in the high-end market is about one to four percentage points higher than their market share islandwide. Although Malaysian buyers make up about one-fifth of all foreign buyers in Singapore, they were active islandwide.

    While the proportion of foreign buyers out of the total number of buyers in the luxury market stands at a high 36 per cent as compared to their islandwide proportion of 25 per cent, they are still outnumbered by locals who make up close to 60 per cent of total home buyers in the high-end market. The dominating presence of local buyers is evident in both the new sale and resale market.

    A further analysis of buying patterns according to price range reveals that 38 per cent of those who purchased homes priced $5 million and above are foreigners. The percentage of Singaporean buyers is only slightly higher at 42 per cent. The remaining 20 per cent of buyers are companies. This indicates that though there were fewer foreign buyers in the high-end market compared to local buyers, most of the foreign buyers are high net worth individuals. Another example that illustrates this point is that 48 per cent of foreign buyers of homes in the prime districts purchased homes priced $1.5 million and above.

    On the speculative side

    The gap between the number of local and foreign buyers narrowed in the sub-sale market. Sub-sales are transactions by private sellers and not developers, before the development is completed. Sub-sales are often used as a proxy for the level of speculative activity in the property market. With foreign and local buyers making up 40 per cent and 56 per cent respectively of the total sub-sale transactions in the prime districts, it can be deduced that both groups of buyers were participating in speculative activities in the high-end market.

    High-end projects that recorded a relatively high number of sub-sale activities in the past 18 months include The Imperial, The Azure, Glentrees and The Sail @ Marina Bay. However, speculative activities have not reached an alarming level: the number of sub-sale transactions only constituted 4.7 per cent of the 8,000 sales in the prime districts.

    Given the optimistic market conditions in Singapore, speculative activity is not limited to new developments. For instance, two units in Ardmore Park were bought and sold within a seven-month period with price increases ranging from 14 per cent to 16 per cent.

    Record breaking prices

    In the 18 months from Q2 2005 to Q3 2006, average prices of non-landed homes in the prime districts rose by 31 per cent. Meanwhile, average private home prices in the rest of Singapore grew by only 13 per cent. The highest price increase in the prime districts was seen in the primary market, where average prices surged by 49 per cent to $1,249 psf. This was mainly due to the record-breaking prices set by luxury projects such as St Regis Residences, Scotts Highpark and The Grange. In the resale market, overall prices rose by 22 per cent, while they went up by 48 per cent in the sub-sale market.

    The sharp price increase in the sub-sale market was influenced by the price movement in the primary market, and the increased liquidity from the large number of collective sales in the prime districts.

    Even though empirical evidence suggests that foreign buyers are not the biggest group of property purchasers in the high-end market, the significant inflow of foreign demand has contributed to the robust rise in prices and sales. With the expected launch of more luxury properties such as those to be developed on collective sale sites in the prime districts, prices in the high-end home market are expected to reach new peaks, generated from activity by local buyers but supported by interest from foreign buyers.

    Nicholas Mak is a director and Michelle Tee is an analyst, research and consultancy at Knight Frank

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    Default GCB market set to appreciate further

    Property 2006
    Published October 12, 2006

    GCB market set to appreciate further

    Growing wealth and a strong economic outlook form a favourable backdrop for the Good Class Bungalow segment to extend its recent gains. By STEVEN MING and YENNY BERLIANNA


    WITH the rapid growth of wealth in India and China, Singapore is not only strategically positioned to benefit as the region's leading financial and wealth management centre but also as a lifestyle trend-setter in Asia. Private banks have expanded their operations by two to threefold over the past two years, meeting increased demand for wealth management professionals to handle the rapid growth in these emerging markets.

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    Exclusive: While Sentosa Cove properties are in a class of their own, their record prices are likely to accelerate the price surge for GCB land.

    According to the latest World Wealth Report by Merrill Lynch and Cap Gemini, there were about 55,000 high net worth individuals in Singapore in 2005, with net investable assets of at least US$1 million. Although they only formed about 1.3 per cent of the population, the figure was 13.4 per cent higher than that in 2004.

    Evidently, the healthy growth and strong market performance helped drive wealth creation for these individuals. In addition, the government's pro-business policies have been attracting new investment dollars into the Lion City. This has been spurred by the planning of new tourism infrastructure to establish the nation as a tourism hub with the bold aim of doubling visitorship by 2015. All this would contribute to greater capital inflows into the country.

    This optimistic backdrop has seen investors flocking back to the local bourse and other traditional investments. The Straits Times Index (STI) is currently trading at around 2,500 compared with 1,600 to 1,900 two to three years ago. Property continues to be an investment favoured passionately by many investors, with the luxury residential market leading gains. The Good Class Bungalow (GCB) market has also benefited. GCBs, deemed as the highest class of residential housing available in Singapore, generally cost in excess of $10 million today. Because of their hefty price tags, GCB buyers are confined to the top echelon of society.

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    Even before the recent surge in prices of luxury residential apartments, the GCB market started a strong run-up from mid-2004. Since then, prices in selected prime areas have surged by as much as 60 to 70 per cent. There have been 73 transactions recorded since the start of the year, compared with 104 transactions for all of 2005. The substantial price increase over the last eight months has also translated to the higher total value of transactions. To date, the total value of all GCB transactions is some $781 million, just a tad shy of the $845 million done for 2005.

    The growing affluence of buyers could be the main explanation for the increased number of large GCB transactions this year.

    There have been 28 GCB transactions for land sizes above 20,000 sq ft. This makes up 38 per cent of the total number of transactions for the first eight months of 2006, against 28 per cent for 2005.

    Due to the government's restriction on foreigners buying landed property here, GCB buyers have predominantly been Singaporeans, although there are a number of permanent residents who have also been granted approval to buy. Buyers are usually highly successful professionals and businessmen as well as captains of industry, with new wealth resulting from the listing of their companies on the stock exchange. Then, there are also the beneficiaries of recent en bloc transactions who want to join the exclusive GCB owners' circle. However, this group makes up just a small proportion of all GCB buyers.

    In another significant trend, there have been a number of opportunistic trades. We have seen several GCBs changing hands in a matter of months or even weeks, with each realising quite handsome capital gains in return. As rental revenues from GCBs are relatively low, these investors would therefore not be buying them for rental returns, but more likely for potential capital gains. Due to the current high demand and limited number of GCBs (estimated at around 2,000 to 2,500 units), and with fewer desirable sites for this 'cream of the crop' sector, these investors have made sizeable profits over a relatively short period.

    Since the beginning of this year, prices of GCBs have increased by double digits. On average, we have seen prices rise by 10 to 15 per cent. Based on recent transactions, the Bishopsgate GCB area seems to have enjoyed the fastest price escalation. A GCB land parcel in Bishopsgate was bought for $410 per sq ft in early 2004, while another plot on the same street was sold for $680 psf in June this year. In 1996, at the height of the property boom, the asking price for GCB land in Bishopsgate was $650 psf.

    Prospective buyers have begun to take notice of the government's plans to revitalise Singapore and how it's gearing up. With Singapore's strong economic outlook, we expect to see continued strong demand for GCBs. Even recent bungalow land parcel sales on Sentosa Cove have exceeded $800 psf. Although we note that Sentosa Cove offers a different lifestyle for the affluent, we believe that the record prices on Sentosa Cove will likely accelerate the price surge for GCB land. With GCBs currently going for $500 to $600 psf, it certainly looks well worth it for investors to put their money on the rarest of gems in the Singapore property market.

    Steven Ming is director, prestige homes and Yenny Berlianna, assistant manager, research & consultancy, Savills Singapore

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    Default When will the mass market move?

    Property 2006
    Published October 12, 2006

    When will the mass market move?

    In the residential market, sales of 99-year leasehold property have slumped while other sectors experience a surge in demand. HAN HUAN MEI looks at the dynamics of the mass market

    IN the first six months of this year, the private residential market registered 4,385 units in the primary market and 5,451 units in the secondary market. It has benefited from the brisk sales momentum, which started in 2005, when demand in the primary and secondary markets chalked up the corresponding transaction volumes of 8,955 units and 7,582 units for the year.

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    This represents a 55 per cent increase in the primary market and a 38 per cent increase in the secondary market over 2004. Overall prices, according to the URA residential price index, also increased by 3.3 per cent in the first half of 2006 and 3.9 per cent in 2005, while luxury homes increased by some 25 per cent in the 12 months from mid-2005 to mid-2006. The outlook for the residential market looks bright; however, the question that begs to be asked is: Does this increased demand and the rise in prices apply to all segments of the residential market, especially the mass market? If not, when is the mass market ever going to pick up?

    A breakdown of new home transactions according to different price bands ($ per square foot) shows that the proportions of homebuyers purchasing luxury, prime, prime-low and mid-tier residences have been on the increase. These are for properties that are priced at more than $700 psf.

    However, the proportion of mass 99-year leasehold and freehold units being sold in the market (priced at less than $700 psf) has been decreasing from a high of 92 per cent in 1998 to a low of 53 per cent in 2005. In the first half of this year, it registered the lowest level of 50 per cent. With half of all homebuyers purchasing either a mid-tier, prime or luxury home in the six months, homebuyers' buying power has strengthened significantly.

    The financial muscle of homebuyers is encouraging, but what about the long-term sustainable growth demand from the base of the market? After all, the overall sustained health of the private residential market will also have to depend on entry level homebuyers, consisting mainly of HDB upgraders.

    According to the latest published HDB Sample Household Survey in 2003, 13.2 per cent of HDB residents were still considering upgrading. This translates into 108,389 households. In the same survey, 14.5 per cent of HDB households indicated that they would like to move to a private residence within the next five years. This is a potential 22,000 buyers between 2003 and 2008, or an average of about 4,400 HDB upgraders per year. And yet, the number of caveats lodged with HDB addresses (used as a proxy for HDB upgraders) in the private new home market has been decreasing from about 6,600 in 2002, to 2,300 in 2003, to 2,200 in 2004, before recovering to about 2,400 caveats in 2005.

    In the first six months of this year, only 1,100 caveats were lodged by HDB addressees. The decline in HDB upgraders in the last few years suggests a possible build-up of demand from HDB upgraders that might occur sooner rather than later. However, the main obstacle that would prevent the floodgates from opening appears to be HDB resale prices.

    The HDB resale factor

    Since the 1990s, prices in the private residential market and the HDB resale market have moved in tandem and are strongly correlated. In 2002, HDB resale prices fell below 1998 levels but recovered by 11.7 per cent by Q1 2005. However, in April 2005, the recovery was abruptly halted by the government's implementation of anti-cashback measures. The HDB resale index fell by 4.8 per cent in Q2 2005 while private property prices strengthened. Currently, HDB resale prices are 9.3 per cent below the last peak in the first quarter of 2000 and 24.9 per cent below prices in the fourth quarter of 1996, when HDB resale prices were at their highest.

    For many HDB homeowners who bought their flats when HDB resale prices were higher than they are now, there is little incentive to sell below their cost. However, should HDB resale prices increase by some 10 per cent, many of these HDB flat owners might be enticed by the still low private property prices in the mass market to sell their HDB flat and upgrade to a private home.

    The drivers of upgrader demand appear to be the basic fundamental elements of employment prospects, wage levels, CPF contributions and gains from the sale of their HDB flats. Combined, these different elements directly affect upgraders' overall ability to afford to move to private residential homes from their present HDB one.

    Suffice to say that there were only a few 99-year leasehold projects launched since 2005, traditionally viewed as the typical product type for HDB upgraders and first-time buyers of private residential property. This lack of new launches for the mass market has also been part of the reason why there has been very little activity affecting the lower end of the residential market.

    Looking ahead in 2006, there are positive signs for the economy, with unemployment at 2.9 per cent as at Q2 2006 and wages likely to build on the estimated 6.5-7.5 per cent GDP growth for 2006. And after a year where there has been a dearth of affordable entry-level projects, the expected launches of mass market projects like Centris at Boon Lay MRT station, Ferraria Park at Flora Drive/Road and the apartments in a mixed development at Yew Tee MRT station might just trigger some pent-up upgrader demand for these private residential homes.

    The writer is senior manager, CBRE Research

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    Default Re: Property 2006

    Property 2006
    Published October 12, 2006

    Buying up a storm

    Luxury condo prices are rising as developers snap up prime sites in a bullish collective sale market, notes JEREMY LAKE


    THE collective sale market started its third and most intensive wave of activity in 2004 and its pace has accelerated since then. (See chart)

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    The two previous waves were from 1994 to 1997 and 1999 to 2000. So far this year, there have been 49 collective sales with a total market value of just over $6 billion. This is more than the 36 sales worth almost $2 billion for the whole of 2005.

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    Hot bids: (above) Habitat 2 on Ardmore Park was sold for $876 psf ppr last year while sales of the recently soft launched Ardmore II (next) have been brisk.

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    The collective sale market has been very active on the back of bullish sentiment particularly at the luxury end of the residential market. Developers have been keen to acquire very prime sites and participate in the recovery in property prices. This has been fuelled by strong foreign buying and to a lesser extent selective local buying of new luxury condominiums which has led to prices returning, and even exceeding, the 1996 peak. The Tate and The Ardmore II were both soft launched recently and have exceeded $2,000 per sq ft for multiple units.

    It is noteworthy that the pool of developers buying sites this time around is much larger and broader-based than it was in the last collective sale boom in 1999/2000 when a small number of developers were most active. We have seen new entrants like Bukit Sembawang, Pontiac Land, Kajima and Hotel Properties buying prime sites. In addition, property funds and financial partners have joined in and teamed up with contractors and developers to buy sites, eg Lehmans and Citadel. The latter is a US-based hedge fund.

    While most developers have bought at least one site, most are still on the lookout to add more sites to their landbanks and we do not sense that budgets are drying up. However, developers are becoming more choosey which is to be expected with the flood of sites now on the market.

    The bidding intensity has been diluted. A year ago we often received more than five tender bids when a tender closed. Now, we are receiving more letters from developers expressing their interest to negotiate a private treaty sale rather than actual tender bids. Developers are inclined to overlook sites which are fundamentally less attractive or are over-priced. Over-pricing is quite common now as many owners have expectations which have overshot the market. This has been compounded in some cases by the recent hike in development charge (DC) rates which have made many sites more expensive.

    The positive sentiment, rising condominium prices and competitive bidding among developers has led to prime land values rising by just over 50 per cent in the last 12 months or so. For example, Habitat 2 on Ardmore Park was sold for $876 psf per plot ratio (ppr) in September last year and Pin Tjoe Court, which is almost opposite Habitat 2, was sold for $1,358 psf ppr in September this year.

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    Jeremy Lake is the executive director of Investment Properties at CB Richard Ellis

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    Default Borrowing smart

    Property 2006
    Published October 12, 2006

    Borrowing smart

    As home loan interest rates rise, analysing the fine print can save you years of financial grief


    IN the last 12 months, one bank raised its home loan rate five times. Another increased its rate twice within two weeks. Should borrowers be running scared?

    The prognosis is mixed. For example, the three-month interbank interest rate - the rate at which banks trade with each other and an indicator of their cost of funds - doubled from 1.75 per cent in January 2005 to 3.5 per cent last month. However, much of that increase was in 2005. Since this January, the interbank rate has stabilised between 3.38 and 3.56 per cent. So in a sense, the banks have been kind in raising rates only recently.

    But what about the future? Many analysts think rates are not going to move much for the rest of the year. The US Federal Reserve, which sets the US Fed Funds rate which the Singapore rate roughly tracks, has indicated that there are likely to be no increases in their rate.

    That is, at least until the Dec 12 Federal Open Market Committee meeting. Beyond that, it is anybody's guess.

    The direction of interest rates should be a concern for most borrowers, of any income range. For the low-income borrower, any rate hike tends to hit spending directly. In the worst case, for someone borrowed to the hilt, maximising CPF resources and using a large portion of his salary for loan repayments, there is little room for error. Default becomes a real possibility.

    For the higher-income borrower who in the last few years has made many speculative property purchases, higher interest rates could also hurt. He may need to liquidate the second home that he can no longer afford to hold, at a lower price.

    Rising property prices should normally be welcomed, but if a borrower has to force-sell his property, then the hit is doubly unkind, since he cannot take advantage of the property boom to maximise his gain.

    Complicating the question of interest rate direction is the proliferation of loan packages in the market, often as many as eight different ones from a single bank, making picking the right loan a Panadol moment for many prospective borrowers.

    Should the new property buyer try to get deals done earlier in case rates rise? Should the borrower refinance the loan to protect himself against increases? These are important questions. In fact, they are getting more important, given rising interest rates. For a borrower of $500,000, getting the right loan may save as much as $5,000 in just the first three years.

    In our experience, it is almost impossible to speculate on the direction of interest rates. Those who think they got it right often confuse skill with luck. A considerably better way to deal with interest rate uncertainty is to know oneself rather than try to know interest rates: Does one really have the time and discipline to refinance loans as interest rates change?

    In truth, we find that some borrowers are simply too busy to track interest rates other than at the start of the property purchase. One or two years out, they often find it too stressful to think about refinancing their loan. We call these people 'inertia' borrowers. For them, the best way might be to simply pay extra and go for higher fixed rates, given the long-term trend of rising rates.

    But not everyone is an inertia borrower. 'Beaver' borrowers are generally better off with floating rates. They can time the refinancing of their home loans, since they spend time tracking interest rates.

    The best starting point, in our experience, is to focus on the core features of the loan and ignore the peripheral ones. Forget the free fridge, the free vacation, the possible deferment of interest, or the higher rates you get on deposits, until you have figured the deal on the core features.

    The core features are those that directly impact your wallet, and they should include the following:

    # Interest rates. Although this seems obvious, the case is considerably more complex once you look at the fine print. For example, some, such as HSBC's Smart Mortgage, have attractive rates only for certain minimum loan amounts.

    Also, competition for loans may keep interest rates down. But when the macroeconomic environment dictates higher interest rates, all banks' rates will rise like boats on a rising tide. So it is prudent to look at the tides.

    Another bit of fine print: The borrower needs to know when the attractive first-year rate kicks in. The later the better, since some loans' first-year rates start the moment the borrower signs the letter of offer, and by the time the first disbursement is drawn down to pay the property developer, it is almost year two, with higher interest rates.

    # Fixed versus variable interest rates. The new DBS 10-year fixed rate mortgage, charges a rate of 5.5 per cent for 10 years, compared with its one-year fixed rate mortgage that charges 3.5 per cent in the first year.

    Borrowers need to make calculated bets on whether the higher fixed rates justify the potential increase in interest rates on a variable loan mortgage. Given that professional economists have a hard time predicting interest rates, making such bets seems stacked against the home loan borrower.

    Here is where we think inertia borrowers should favour fixed rates and beaver borrowers, variable rates.

    # Legal subsidy. This is usually several thousand dollars, not a small sum relative to most loan sizes. It is important because some banks do not offer it and some borrowers forget to ask about it until it is too late. Some banks even state in the fine print that if you switch banks within a certain period, you have to pay back the legal subsidy.

    # Cost of lock-in. Many loan packages have clauses to make it difficult for borrowers to refinance - that is, to switch banks - later. The usual clause locks a borrower in for three years, during which she can refinance only by paying a fee. Some borrowers are aghast to find that some clauses impose the fee not on the amount outstanding when they refinance, but on the original loan. Similarly, the lock-in period could start from the time the loan agreement is signed to as late as the first draw down of funds.

    But having considered these lock-in features, a borrower still has to weigh other factors, such as whether alternative loan packages are going to get better enough to refinance in the first place, and whether the interest rates during the lock-in period are variable and subject to increase. A refinancier who who does not have the time pressure of a new property buyer, should ask himself whether to refinance now or later, or at all.

    An important consideration is to calculate the costs and benefits, given the uncertainty in interest rates, the additional lock-in period that might come with refinancing and the legal fees. In addition, for those staying in HDB flats, there is the untested assumption that banks might be as lenient as the HDB when it comes to defaults. And since timing is flexible for the prospective refinancier, it is also important to see if waiting for new, better loan packages is the right move.

    In the last few months, many banks have introduced new packages. This renewed aggressiveness is due to several factors. First, the number of prospective borrowers continues to be small. With a small market, competitors try harder.

    Second, some bankers who work with dollarDEX tell us that the potential increase in property value makes banks more positive about home loans. So they are positioning themselves for an upsurge.

    But all this has to be considered in the context of the interest rate environment. Here, the news is not good. Rates appear more likely to go up than down, which led many local banks to increase their rates recently.

    However, many foreign banks have not followed suit. This is because interest rates on longer maturities have not moved up as much.

    Against this backdrop, you must also determine the cost of waiting, since until you refinanced, you are paying your current higher interest rates. What are some steps that smart borrowers might undertake?

    Get educated, since there are intricacies that borrowers need to be aware of. For instance, one dollarDEX client who asked us to help him refinance his loan was astonished when we told him that, beyond the penalty charges, he had to compensate his current bank for 'redeployment of funds on early repayment'.

    Get help from professional advisers who may also have greater bargaining power with banks. Buying a property is one of the most exciting rites of passage for many households. It can remain exciting, as long as one keeps an eye on financing. Otherwise, it can also be the beginning of years of grief.

    This article was contributed by dollarDEX Investments. dollarDEX is a wealth management firm that was recently ranked among the Global Top 30 for online finance by the Institutional Investor magazine. Details are at [url]www.dollarDEX.com[/url]

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