View Full Version : SOR turns negative in the Switzerland of Asia
THE SWITZERLAND OF ASIA
The rush for safety has spilled into Singapore and led to the city-state following the United States and Switzerland where short-term interest rates have turned negative, implying that depositors are willing to pay to keep funds at banks or in short-term bills.
Singapore's swap offer rate (SOR) -- a rate determined by both local deposit rates and FX forwards -- was set in negative territory for the second day on Thursday as funds seeking safety flooded the local market with cash. The six-month SOR was fixed in negative territory for the first time ever on Wednesday.
On Thursday, three and six month rates were fixed at minus 0.69870 and minus 0.99258 percent respectively.
"In the current climate of the U.S. keeping rates low for an extended period of time, and given the MAS's FX appreciation bias, we believe the likely outcome will be sustained low fixes and, in the near term, negative fixes," said analysts at Nomura in a note to clients.
The Singapore central bank's resolve to allow more currency appreciation and deter capital inflows -- on top of funds rushing into what's seen as the safest bond market in Asia -- have all led to the rare occurrence of negative interest rates.
Read full article (http://www.reuters.com/article/2011/08/11/us-money-markets-idUSTRE77A13P20110811)
This is just great! I took up a SOR-linked bank loan last month :D
So boathouse residence's uob promo SOR+0% till top, we get cash back every month?
:rolleyes:
Don't know :confused: Is there a clause in the agreement stating that the interest will be at least $0? If not, the banks are paying you to borrow money from them :D
Dropping too but at a slower rate.
Mine is 0.75% above 3-mth SOR
Technically, does that mean 0.75 + ( minus 0.69870) = 0.0513%
Can the bank dont follow?:D
Borrowers cheered yesterday as the swap offer rate (SOR), a benchmark interest rate that mortgage rates are commonly pegged to, fell below zero for the first time.
In a historic moment for Singapore’s banking industry, the three-month SOR plunged to -0.0119%.
The SOR, which is fixed by the Association of Banks in Singapore daily, represents the average cost of funds that banks in Singapore use for commercial lending. It also factors in exchange rate movements.
Traditionally, the SOR is more volatile than the Singapore inter-bank offered rate (Sibor), which is the other benchmark interest rate in Singapore.
A negative rate is startling because in economic theory, it implies that banks are so flush with cash that they now charge a “fee”- as opposed to paying interest – for accepting deposits.
Bankers said yesterday that this is happening because investors are switching out of the US dollar, and there are increased cash flows into Singapore.
The Singdollar to US dollar exchange rate also affects the SOR. With a weakening greenback, the SOR will continue to fall.
Banks here typically peg their loan packages to the Sibor or SOR, plus a profit margin.
But don’t expect banks to end up paying their customers to borrow from them.
OCBC Bank and UOB, which have loans packages pegged to the SOR, have said that there are clauses to “floor” the rates at zero, even if the SOR is negative.
Still, Mr Vinod Nair, chief executive of website Smartloans.sg, which offers home loan comparisons, said: “I think now is a great time to refinance home loans, and I don’t expect the SOR to rebound in the next few years, so there should not be an issue with volatility.”
Home owners taking up new Sibor-pegged property loans pay between 1% and 1.33%, while loans pegged to the SOR may end up paying between zero and 0.6% with the new SOR rates, he noted.
Indeed, some economists believe that SOR rates are likely to remain low for a while yet.
UOB economist Chow Penn Nee said some factors that will keep interest rates low include the United States Federal Reserve’s announcement that interest rates will be kept low until mid-2013.
Also, with the Monetary Authority of Singapore’s current monetary policy stance of a Singdollar appreciation, the US dollar is likely to fall against the Singdollar.
This will mean even more funds flowing into Singapore, which still has a triple-A rating and is considered an alternative to the US dollar.
Mr Saktiandi Supaat, Maybank’s head of forex research, said: “we may see a rebound if there is some intervention by the MAS or if the forward rate changes due to market developments. But given the already low SOR rates we are seeing over the past year or so at around 0.2%, the rebound may not be so soon.”
Barclays Capital economist Leong Wai Ho, on the other hand, does not think that the depressed SOR will persist.
He said: “This is not considered equilibrium, and can’t last too long. It counters the macro-prudentials that have been put in place to lighten property speculation.”
“I think this may be an MAS move to discourage fund flows into Singapore. It may last for two weeks, until we get over the phase of our lives that we are worried about the US downgrade.”
Source: the Straits Times
UOB has withdrawn all SOR-based packages and replaced them with SIBOR-based packages. For those with existing SOR-based packages, they will peg the SOR at 0% if it dips into the negative level. For eg if your pkg is SOR+1% and SOR is negative, u still have to pay 1% interest. Chinese bank not so dumb lah......sure got clause to protect their interests..... :ashamed1:
UOB has withdrawn all SOR-based packages and replaced them with SIBOR-based packages. For those with existing SOR-based packages, they will peg the SOR at 0% if it dips into the negative level. For eg if your pkg is SOR+1% and SOR is negative, u still have to pay 1% interest. Chinese bank not so dumb lah......sure got clause to protect their interests..... :ashamed1:
Which bank is still offering SOR?
Which bank is still offering SOR?
Support me la.. I am a mortgage broker :)
Support me la.. I am a mortgage broker :)
Are you sure boh? Sekali you OKT ah.
propertyinvestor
12-08-11, 08:05
Which bank is still offering SOR?
I just took up the 3m SOR from bank of china and UOB recently. Very good interest rate. May consider to buy another unit for investment if the price from developer is good. Cheer for low low interest rate........
You can try ANZ.
Which bank is still offering SOR?
I just took up the 3m SOR from bank of china and UOB recently. Very good interest rate. May consider to buy another unit for investment if the price from developer is good. Cheer for low low interest rate........
UOB already withdrawn all SOR-based pkgs liao
Tks. Care to share what pkg did you sign with these banks?
UOB already withdrawn all SOR-based pkgs liao
Ya loh. Spoke to UOB a few mins ago. She say she already warned me it will expire end July.
Got some info:
China Bank: if SOR negative, they take as zero &
ANZ: taking 0.1% as min. for SOR even if negative..
my CIMB 3mth SOR package has no clause on negative SOR rate, or minimum rate. So am I getting paid for borrowing soon?
flagship74
12-08-11, 20:36
Support me la.. I am a mortgage broker :)
Support u lah, buy me kopi...tell me more:D
flagship74
12-08-11, 20:37
my CIMB 3mth SOR package has no clause on negative SOR rate, or minimum rate. So am I getting paid for borrowing soon?
i think so..gd for u:scared-5:
kingkong1984
12-08-11, 21:34
my CIMB 3mth SOR package has no clause on negative SOR rate, or minimum rate. So am I getting paid for borrowing soon?
Test case... Sue for it ;)
Beware catch all clause though.....
Test case... Sue for it ;)
Beware catch all clause though.....
Banks sure eat you. They cannot be trusted. Even if you are right, you can try hiring lawyers and spend your time to fight the case. It is not worth it unless you are sure negative SOR drags on (they would have come out with a internal circular to floor the rates at 0% or +x%) or your have borrowed millions.
Is it written as a clause in the mortgage agreement?
Got some info:
China Bank: if SOR negative, they take as zero &
ANZ: taking 0.1% as min. for SOR even if negative..
Do you know????
SOR rates
1 mth 0.72349
2 mths 0.61221
3 mths 0.69870
6 mths 0.99258
9 mths 0.16382
12 mths 0.19770
And finally sibor moved.
1 mth 0.26944
2 mths 0.33056
3 mths 0.39528
6 mths 0.50208
9 mths 0.60833
12 mths 0.66944
flagship74
13-08-11, 11:51
Do you know????
SOR rates
1 mth 0.72349
2 mths 0.61221
3 mths 0.69870
6 mths 0.99258
9 mths 0.16382
12 mths 0.19770
And finally sibor moved.
1 mth 0.26944
2 mths 0.33056
3 mths 0.39528
6 mths 0.50208
9 mths 0.60833
12 mths 0.66944
tks for sharing:scared-5:
I thought SOR was negative yesterday. Suddenly has gone so much positive?
Do you know????
SOR rates
1 mth 0.72349
2 mths 0.61221
3 mths 0.69870
6 mths 0.99258
9 mths 0.16382
12 mths 0.19770
And finally sibor moved.
1 mth 0.26944
2 mths 0.33056
3 mths 0.39528
6 mths 0.50208
9 mths 0.60833
12 mths 0.66944
I thought SOR was negative yesterday. Suddenly has gone so much positive?
All the SOR rates up to 6 month are negative. He never looked at the sign of the quote, e.g. SOR 6M is -0.99
Do you know????
SOR rates
1 mth 0.72349
2 mths 0.61221
3 mths 0.69870
6 mths 0.99258
9 mths 0.16382
12 mths 0.19770
And finally sibor moved.
1 mth 0.26944
2 mths 0.33056
3 mths 0.39528
6 mths 0.50208
9 mths 0.60833
12 mths 0.66944
What's your source?
The figure for 3-month SOR at Bloomberg (http://www.bloomberg.com/apps/quote?ticker=SORF3M:IND) is still a negative.
darn. my staff gave me wrong rates. i just checked teletext. :doh: this is :ashamed1:
3m sor is -0.362
3m sibor 0.36251
btw BOC for new applications will apply floor rate of 0.2% if SOR is <0. Hence it is spread + 0.2%
Do you mean it applies to both new application and existing agreement for ANZ?
Got some info:
China Bank: if SOR negative, they take as zero &
ANZ: taking 0.1% as min. for SOR even if negative..
Do you mean it applies to both new application and existing agreement for ANZ?
I spoke to my BOC banker on my existing, and ANZ is what is reported in BT. Best call them personally, I do suspect for new loans, they may have amended clauses in the new loan document....
Will check with my banker on Monday as it was refinanced a few months ago.
I spoke to my BOC banker on my existing, and ANZ is what is reported in BT. Best call them personally, I do suspect for new loans, they may have amended clauses in the new loan document....
Bank has no right to floor sor at 0.2 or 0.1. At current nominal rate, 0.2 is a perfectly normal rate ! Floor it at 0 is still explainable. Banks like Citi floor the total rate at 0.9, that's more fair, as this is spelt out clearly upfront.
I agree with amk. It's unreasonable for bank to set the floor at anything more than 0% - unless the spread is 0%. :hell-hath-no-fury: Because the spread is supposed to cover their cost and margin.
Mine is 0.75%+SOR for year 1-4. 1%+SOR for 5th year onwards.
Here's the clause from my loan document:
"The bank may in its absoluate discretion vary any interest rate, the basis for calculating the interest rate (including any base lending rate or other reference rate including SOR or SIBOR), by notice in writing to you."
I sent an email to banker to ask.
Hope they set the floor at 0%.
Need to check if my loan document has similar clause like yours. Bank will always have blanket clause that are ambiguous. Lawyers are paid well to write that way.
I agree with amk. It's unreasonable for bank to set the floor at anything more than 0% - unless the spread is 0%. :hell-hath-no-fury: Because the spread is supposed to cover their cost and margin.
Mine is 0.75%+SOR for year 1-4. 1%+SOR for 5th year onwards.
Here's the clause from my loan document:
"The bank may in its absoluate discretion vary any interest rate, the basis for calculating the interest rate (including any base lending rate or other reference rate including SOR or SIBOR), by notice in writing to you."
I sent an email to banker to ask.
Hope they set the floor at 0%.
moshimoshi
14-08-11, 11:06
Need to check if my loan document has similar clause like yours. Bank will always have blanket clause that are ambiguous. Lawyers are paid well to write that way.
Have checked my loan document and it specifically says that the min will be 0% even if it falls below.
The banks would refuse to change the "standard" clauses anyway - unless I am loaning very large amount. I requested for a change in the clause about they have the right to engage a lawyer and charge back to me but of course they said no. (The verbal clarification from lawyer and banker is that I'm using the same law firm as the bank so I don't need to pay any legal fees.) All I got was an email confirmation that the law firm they are using is X.
moshimoshi, may I know which bank is that and when was the agreement signed?
Care to share which bank?
Have checked my loan document and it specifically says that the min will be 0% even if it falls below.
Maybe due to super low interest rate, keen buyers are back.
2-mths ago, my brother in-law was selling his EC.. bank value $860k.. last offer $820k.. so no deal.
Over last weekend end, suddenly come 20 buyers & out of 20, 4 made an offer.
This time the same bank value $950k.. last offer $840k:scared-5: .. but no deal again cos the seller think now he is looking at $880k
Maybe due to super low interest rate, keen buyers are back.
2-mths ago, my brother in-law was selling his EC.. bank value $860k.. last offer $820k.. so no deal.
Over last weekend end, suddenly come 20 buyers & out of 20, 4 made an offer.
This time the same bank value $950k.. last offer $840k:scared-5: .. but no deal again cos the seller think now he is looking at $880k
Ya, I also observed similar.., was looking at 1 property end May/June, asking $2.98m, last offer $2.78m, no deal. Now asking $3.08m, buyer offer $2.88m, no deal also...:scared-3:
Ya, I also observed similar.., was looking at 1 property end May/June, asking $2.98m, last offer $2.78m, no deal. Now asking $3.08m, buyer offer $2.88m, no deal also...:scared-3: Lower subsale volume could be due to moving expectation ofc sellers.
Lower subsale volume could be due to moving expectation ofc sellers.
Ya, sellers moving their goalposts..., relax, taking their time and testing new highs...
If SOR is negative the banks should be taking it as 0%...
propertyinvestor
14-08-11, 21:20
UOB already withdrawn all SOR-based pkgs liao
OIC, my 3m SOR uob package already signed and confirmed couple of weeks ago.
OIC, my 3m SOR uob package already signed and confirmed couple of weeks ago.
so u are very heng lah...... :spliff:
cimb bank just send me a letter informing that they will set a SOR floor rate at 0% with immediate effect. can they simply change the terms of existing loan?
propertyinvestor
16-08-11, 18:06
cimb bank just send me a letter informing that they will set a SOR floor rate at 0% with immediate effect. can they simply change the terms of existing loan?
I think floor at zero should be reasonable. Heard some banks floor at 0.1/0.2.
BOC 0.2% and Anz 0.1% if SOR is negative during pricing for new applications
There is no clause in the loan document that spells out the floor rate. Called the bank and they said they have not finalised the floor rate. It is rather strange? :confused:
BOC 0.2% and Anz 0.1% if SOR is negative during pricing for new applications
There is no clause in the loan document that spells out the floor rate. Called the bank and they said they have not finalised the floor rate. It is rather strange? :confused:
Yah! I think it is quite strange. They should have finalized by now. Which bank u check? I have checked with UOB and OCBC. Both are flooring at 0%.
There is no clause in the loan document that spells out the floor rate. Called the bank and they said they have not finalised the floor rate. It is rather strange? :confused:
Eh what's strange? U mean your banker tell u otherwise for New cases?
Yah! I think it is quite strange. They should have finalized by now. Which bank u check? I have checked with UOB and OCBC. Both are flooring at 0%.
Uob do not offer SOR for new cases
Uob do not offer SOR for new cases
Luckily, secured my SOR package last week. :spliff:
Mine is on UOB 0.8%+SOR (mthly rate).. so for the past few mths repayment was between 0.94-1.03%
Yesterday I received next mth rate is 0.8%
Uob do not offer SOR for new cases
I am referring to the old package. UOB do not offer any SOR now. However, SIBOR is available.
3mth SOR -0.0566
1mth sibor 0.234
3mth sibor 0.347
ER.. Will the sibor drop to 0.1? :D
It is really a great time to leverage on the bank's $.
3mth SOR -0.0566
1mth sibor 0.234
3mth sibor 0.347
ER.. Will the sibor drop to 0.1? :D
It is really a great time to leverage on the bank's $.
Simply loving it. :rolleyes:
It is really a great time to leverage on the bank's $.
sibor 1mth : 0.2271
sibor 3mth : 0.3457
SOR 3mth : 0.154 - rebounded from negative ah :eek:
sibor 1mth : 0.2271
sibor 3mth : 0.3457
SOR 3mth : 0.154 - rebounded from negative ah :eek:
perhaps that's why banks didnt panicked when 3m sor was negative as pricing not done yet.
I have this on OCBC as of yesterday:
Market Report Overnight Releases* (http://www.ocbc.com/wealth_mgmt/main/index.shtm#) Releases Today* (http://www.ocbc.com/wealth_mgmt/main/index.shtm#) No Key Closing Levels LastPrevious1SGD 3 month SIBOR Fixing0.35%0.36%2SGD 3 month SOR Fixing-0.17%-0.18%
perhaps that's why banks didnt panicked when 3m sor was negative as pricing not done yet.
I have this on OCBC as of yesterday:
Market Report Overnight Releases* (http://www.ocbc.com/wealth_mgmt/main/index.shtm#) Releases Today* (http://www.ocbc.com/wealth_mgmt/main/index.shtm#) No Key Closing Levels LastPrevious1SGD 3 month SIBOR Fixing0.35%0.36%2SGD 3 month SOR Fixing-0.17%-0.18%
that why i m surprise, just one day, it can rises 0.325, from -0.1715 to +0.1535 :doh:
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