View Full Version : What if loan interest goes up to 4% up to 7%?
like in those bad old days?
Possible?
If that happens, property prices will DIVE. Might not be in the near future but maybe in 3 or 4 years time? Everyone is so used to the low rates now its kinda scary.
ikan bilis
02-06-12, 10:35
interest rate sensitivity....
i estimated i could tahan until interest rate at 6-7%... which means sibor around 4.5-5.5%...
but at high fed rate of 3-4%... the whole usa financial sectors might collapse into rubble flat flat... somehow i think me stronger than usa banks... cool!... :ashamed1: :cool:
buttercarp
02-06-12, 10:44
That's why I worry for yowetan if he makes he plunge for a property now.
For me, I guess I can still tahan.
Worse case scenario, just have one property, and not invest in another.
That's why I worry for yowetan if he makes he plunge for a property now.
For me, I guess I can still tahan.
Worse case scenario, just have one property, and not invest in another.
since he work in bank, maybe he can forsee the interest rate movement better... :cool:
Not surprise. Posbank loan used to be 5.75%.
If that happened... Singapore dollar will equal to USD or more. Then its time to cash out and take the currency gain to iskandar johor to buy a big landed house.
then it wont be a DOG eat DOG world will be a MAN eat MAN world...:scared-1::scared-1::scared-1:
http://www.memphisrap.com/2012/06/01/first-cannibal-attack-in-miami-now-maryland-man-eats-roomates-heart-and-brain/
ikan bilis
02-06-12, 11:31
can say tankuku for high interest rate lah....
if you guys look at the state where usa+europe are in now... do you think they can up interest rate ??... they are actually trying to find some good reasons to push out qe3, ltro3, eurobond and etc...
usa+europe need endless roll over of govts' credit cards debt... govts need 0% credit card interest rate...
current risks for property investment is bigger on global enconomy collapses, china hardlanding and etc... little risk on high interest rate...
:cool:
phantom_opera
02-06-12, 11:36
日有阴晴圆缺,人有悲欢离合,息有高低不同，应该有备无患
日有阴晴圆缺,人有悲欢离合,息有高低不同，应该有备无患
Your chinese is good.
日有阴晴圆缺,人有悲欢离合,息有高低不同，应该有备无患
wa...you copy from where one..
:p:p
CondoInterested
02-06-12, 12:39
日有阴晴圆缺,人有悲欢离合,息有高低不同,应该有备无患Yo, its moon, not sun lah.
CondoInterested
02-06-12, 12:42
Interest up also depend it's HDB or PC.
If HDB, also depend it's HDB / CPF loan or bank loan.
If HDB / CPF loan, unlikely will change, if bank, headache lor.
If PC, than wait to pick some reasonable bargain PC lor.
can say tankuku for high interest rate lah....
if you guys look at the state where usa+europe are in now... do you think they can up interest rate ??... they are actually trying to find some good reasons to push out qe3, ltro3, eurobond and etc...
usa+europe need endless roll over of govts' credit cards debt... govts need 0% credit card interest rate...
current risks for property investment is bigger on global enconomy collapses, china hardlanding and etc... little risk on high interest rate...
:cool:
try telling that to our economist..Mr B...:doh:
The US Federal Reserve (http://en.wikipedia.org/wiki/Federal_Reserve) held between $700 billion and $800 billion of Treasury notes on its balance sheet before the recession. In late November 2008, the Fed started buying $600 billion in Mortgage-backed securities (http://en.wikipedia.org/wiki/Mortgage-backed_securities) (MBS).[42] (http://en.wikipedia.org/wiki/Quantitative_easing#cite_note-41) By March 2009, it held $1.75 trillion of bank debt, MBS, and Treasury notes, and reached a peak of $2.1 trillion in June 2010. Further purchases were halted as the economy had started to improve, but resumed in August 2010 when the Fed decided the economy was not growing robustly. After the halt in June holdings started falling naturally as debt matured and were projected to fall to $1.7 trillion by 2012. The Fed's revised goal became to keep holdings at the $2.054 trillion level. To maintain that level, the Fed bought $30 billion in 2–10 year Treasury notes a month. In November 2010, the Fed announced a second round of quantitative easing, or "QE2", buying $600 billion of Treasury securities (http://en.wikipedia.org/wiki/Treasury_securities) by the end of the second quarter of 2011.
Operation Twist (2011)
The Federal Open Market Committee concluded its September 21, 2011 Meeting at about 2:15PM EDT by announcing the implementation of Operation Twist. This is a plan to purchase $400 billion of bonds with maturities of 6 to 30 years and to sell bonds with maturities less than 3 years, thereby extending the average maturity of the Fed's own portfolio.[4] (http://en.wikipedia.org/wiki/Operation_Twist#cite_note-3) This is an attempt to do what Quantitative Easing (QE) tries to do, without printing more money and without expanding the Fed's balance sheet, therefore hopefully avoiding the inflationary pressure associated with QE.[5] (http://en.wikipedia.org/wiki/Operation_Twist#cite_note-4) This announcement brought a bout of risk aversion in the equity markets and strengthened the US Dollar, whereas QE I had weakened the USD and supported the equity markets.
http://en.wikipedia.org/wiki/Quantitative_easing
The Bank of England (http://en.wikipedia.org/wiki/Bank_of_England) had purchased around £165 billion of assets by September 2009 and around £175 billion of assets by end of October 2010.[45] (http://en.wikipedia.org/wiki/Quantitative_easing#cite_note-speech404-44) At its meeting in November 2010, the Monetary Policy Committee (http://en.wikipedia.org/wiki/Monetary_Policy_Committee) (MPC) voted to increase total asset purchases to £200 billion. Most of the assets purchased have been UK government securities (gilts), the Bank has also been purchasing smaller quantities of high-quality private sector assets.[46] (http://en.wikipedia.org/wiki/Quantitative_easing#cite_note-45) In December 2010 MPC member Adam Posen (http://en.wikipedia.org/wiki/Adam_Posen) called for a £50 billion expansion of the Bank's quantitative easing programme, whilst his colleague Andrew Sentance (http://en.wikipedia.org/wiki/Andrew_Sentance) has called for an increase in interest rates due to inflation being above the target rate of 2%.[47] (http://en.wikipedia.org/wiki/Quantitative_easing#cite_note-Independant2167438-46) In October 2011, the Bank of England announced it would undertake another round of QE, creating an additional £75 billion,[48] (http://en.wikipedia.org/wiki/Quantitative_easing#cite_note-47) and in February 2012 it announced an additional £50 billion,[49] (http://en.wikipedia.org/wiki/Quantitative_easing#cite_note-48) bringing the total amount to £325 billion. The Bank of England has said that it will not buy more than 70% of any issue of government debt.[50] (http://en.wikipedia.org/wiki/Quantitative_easing#cite_note-49) This means that at least 30% of each issue of government debt will have to be bought by other institutions.
The European Central Bank (http://en.wikipedia.org/wiki/European_Central_Bank) (ECB) said it would focus efforts on buying covered bonds, a form of corporate debt. It signalled initial purchases would be worth about €60 billion in May 2009.
The Bank of Japan (http://en.wikipedia.org/wiki/Bank_of_Japan) (BOJ) increased the commercial bank current account balance from ¥5 trillion yen (http://en.wikipedia.org/wiki/Japanese_yen) to ¥35 trillion (approximately US$300 billion) over a 4 year period starting in March 2001. As well, the BOJ tripled the quantity of long-term Japan government bonds it could purchase on a monthly basis. In early October 2010, the BOJ announced that it would examine the purchase of ¥5 trillion (US$60 billion) in assets. This was an attempt to push the value of the yen versus the US dollar down to stimulate the local economy by making their exports cheaper; it did not work.[52] (http://en.wikipedia.org/wiki/Quantitative_easing#cite_note-51) On 4 August 2011 the bank announced a unilateral move to increase the amount from ¥40 trillion (US$504 billion) to a total of ¥50 trillion (US$630 billion).[53] (http://en.wikipedia.org/wiki/Quantitative_easing#cite_note-52)[54] (http://en.wikipedia.org/wiki/Quantitative_easing#cite_note-53) In October 2011 the Bank of Japan expanded its asset purchase program by ¥5 trillion ($66bn) to a total of ¥55 trillion.[55] (http://en.wikipedia.org/wiki/Quantitative_easing#cite_note-54)
Can anyone enlighten me how to increase bank interest rate, when the bank need money they just call the central bank to print.
As of April 2012, the exposure of the ECB to Greece, Portugal, Ireland, Spain and Italy, had doubled in a year to €918bn, mostly in lending programmes like LTRO (http://en.wikipedia.org/wiki/European_Central_Bank#Long_term_refinancing_operation) (€703.61bn) but also in the Securities Markets Programme (€214bn).[28] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-ECB_exposure-27) Imbalances run in the TARGET2 payments system amounted to more than €800bn according to a March, 2012 report.[29] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-28) In late May 2012, Peter Boone and Simon Johnson (http://en.wikipedia.org/wiki/Simon_Johnson_%28economist%29) wrote that "between Target2 and direct bond purchases alone, the euro system claims on troubled periphery countries are now approximately 1.1 trillion euros (this is our estimate based on available official data). This amounts to over 200 percent of the (broadly defined) capital of the euro system."[30] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-29) Others worked on tracking the TARGET2 balances in light of their growing scale and the growing concerns about them.[31] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-30)
On 21 December 2011 the bank instituted a programme of making low-interest loans with a term of 3 years (36 months) and 1% interest to European banks accepting loans from the portfolio of the banks as collateral. Loans totalling €489.2 billion ($640 billion) were announced. The loans were not offered to European states, but government securities issued by European states would be acceptable collateral as would mortgage securities (http://en.wikipedia.org/wiki/Mortgage_securities) and other commercial paper (http://en.wikipedia.org/wiki/Commercial_paper) that can be demonstrated to be secure. The programme was announced on 8 December 2011 but observers were surprised by the volume of the loans made when it was implemented.[69] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-ECB82011-68)[70] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-NYTloans-69)[71] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-NYTNorris-70) Under its LTRO it loaned €489 billion to 523 banks for an exceptionally long period of three years at a rate of just one percent.[72] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-71) The by far biggest amount of €325 billion was tapped by banks in Greece, Ireland, Italy and Spain.[73] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-72) This way the ECB tried to make sure that banks have enough cash to pay off €200 billion of their own maturing debts in the first three months of 2012, and at the same time keep operating and loaning to businesses so that a credit crunch does not choke off economic growth. It also hoped that banks would use some of the money to buy government bonds, effectively easing the debt crisis.[74] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-73)
On 29 February 2012, the ECB held a second 36 month auction, LTRO2, providing eurozone banks with further €529.5 billion in low-interest loans.[75] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-74) This second long term refinancing operation auction saw 800 banks take part. This can be compared with the 523 banks that took part in the first auction on 21 December 2011.[76] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-Euromoney-75) Net new borrowing under the February auction was around €313 billion – out of a total of €256bn existing ECB lending €215bn was rolled into LTRO2.[76] (http://en.wikipedia.org/wiki/European_Central_Bank#cite_note-Euromoney-75)
http://en.wikipedia.org/wiki/European_Central_Bank#Long_term_refinancing_operation
This morning, after the U.S. Labor Department announced the disappointing non-farm payroll report gold started to surge higher. The catalyst for the rise in gold is the anticipation and speculation of another quantitative easing program by the Federal Reserve. Today, the SPDR Gold Shares (NYSE:GLD) are trading higher by more than $5.00 from the pre-market low to $155.49 a share.
Something that traders must realize is that the Federal Reserve is still in the middle of doing its Operation Twist program. This program is where the central bank sells short to medium term bonds and buys long term bonds in order to push interest rates down. This helps investors and potential borrowers to get a low interest rate on loans such as mortgages and construction borrowing. Today, the interest rate on a 30 year fixed mortgage rate is around 3.75 percent. This is a historic low for the 30 year mortgage. The Operation Twist program by the Federal Reserve is scheduled to last into the end of June 2012.
Will lowering interest rates further with another quantitative easing program really help the economy? The answer to this question is really open for debate. All of the quantitative easing that the central bank has done has led to inflation and higher stock prices, therefore, another QE-3 could inflate the stock markets and help raise the price of food and energy. Traders in the past will usually be able to telegraph artificial inflation when the price of gold and silver rise.
http://wallstreetpit.com/92605-gold-surges-on-qe-3-rumors
Quick go out and buy another property, QE3 is coming.........
QE1, QE2, LTRO, Japan Central bank, UK Central bank print money interest rate go down, do you think QE3 interest rate will go up.
Bank of America (http://www.businessinsider.com/blackboard/bank-of-america) U.S. economist Michelle Meyer weighed in on the disappointing (http://video.msnbc.msn.com/cnbc/47647891/#47647891) nonfarm payrolls report on CNBC (http://www.businessinsider.com/blackboard/cnbc), saying that quantitative easing from the Federal Reserve is now inevitable.
With the underlying trend for job growth settled in around 125,000 by her estimates (when looking at overstatements in the winter), Meyer believes the Fed will have to act even as election nears this fall.
"I think that if the economy does what we think it will, which is continue to slow, reach about 1 percent GDP growth by the fourth quarter, I think QE is inevitable. The Fed can't sit idle," Meyer said. "By the August 1st meeting or even September, the data could be weak enough that it does prompt Fed action despite the election."
http://www.businessinsider.com/michelle-meyer-qe-is-inevitable-the-fed-cant-sit-idle-2012-6
Interbank interest clash overnight...
SIBOR SOR
1 Month 0.31794 0.15475
2 Month 0.37573 0.22007
3 Month 0.39714 0.30656
6 Month 0.44893 0.45255
9 Month 0.51929 0.67948
12 Month 0.59864 0.7055223122
SOR has crashed again. 3mSOR is below 1mSIBOR. 1mSOR fell by almost 30% overnight.
http://www.siborratesingapore.com/sibor-rates-1-june-2012
http://www.businessinsider.com/raoul-pal-the-end-game-2012-6#-1
Will you go and buy a property in Greece, Ireland, Iceland, Spain, USA, UK because it is cheap?
Or will you go and buy a property in Singapore?
http://www.businessinsider.com/raoul-pal-the-end-game-2012-6#-1
thx for sharing
TheOnlyGayInTheVillage
02-06-12, 17:29
Yo, its moon, not sun lah.
He or she talking solar eclipse lol
Will you go and buy a property in Greece, Ireland, Iceland, Spain, USA, UK because it is cheap?
Or will you go and buy a property in Singapore?
Whether you ask people in Greece, Ireland, Iceland, Spain, USA, UK, China, India and even Singaporeans, the answer is the same !
Buy SINGAPORE properties if got money!
DKSG
like in those bad old days?
Possible?
If that happens, property prices will DIVE. Might not be in the near future but maybe in 3 or 4 years time? Everyone is so used to the low rates now its kinda scary.
Hi groggy,
Can you share why you chose to ask the question "What if loan interest goes up to 4% up to 7%?" (http://forums.condosingapore.com/showthread.php?p=277220#post277220) instead of "What can cause the Loan interest to goes up to 4% up to 7 %?"
What is there to stop MAS from printing money if the whole world is printing?
What is there to stop MAS from printing money if the whole world is printing?
MAS has to print money when the whole world is printing. Problem is when everyone begin to know the money printing game what will they do.
For those who are not playing the game and waiting for this to go down for that to go down and not knowing why is it not going down and instead going up, they will begin to understand the money printing game and start to join the game.:cheers2:
Hi groggy,
Can you share why you chose to ask the question "What if loan interest goes up to 4% up to 7%?" (http://forums.condosingapore.com/showthread.php?p=277220#post277220) instead of "What can cause the Loan interest to goes up to 4% up to 7 %?"
Hi Arcachon,
I am just trying to think from a layman's POV. On the whole, global property prices have been rising in tandem with lower interest rates over the last decade. Ironically, property prices in US remain low in spite of all the printing and US being the epicentre of the crisis and quantitative easing. I notice that Singapore and Hong Kong property prices have surged the most over the last 2 years. This is most likely due to the very low interest rates in these 2 places. Naturally, the question becomes what will happen IF interest rates go up? I agree that there is no reason why interest rates need to go up. The only reason is to curb inflation. Thus, I believe interest rates will only go up when economy is doing very well, not when there is crisis looming in Europe. But does that mean, property will not crash if interest rates remain low? Not necessarily also as US property prices crashed because of subprime and remain low even as rates are low. Ditto Japan. Another thing is will this low interest rate era last forever since there is no incentive for any country to raise interest rates? If so, does that mean property prices in countries that have higher interest rates like Australia and Malaysia will have more legs to run when their interest rates are also reduced gradually towards zero?
jumbopanther
02-06-12, 23:18
MAS has to print money when the whole world is printing. Problem is when everyone begin to know the money printing game what will they do.
For those who are not playing the game and waiting for this to go down for that to go down and not knowing why is it not going down and instead going up, they will begin to understand the money printing game and start to join the game.:cheers2:
When everyone is printing money, means value of money will drop. Our $1 now will worth few cents in years to come.
So simple question, which is more valuable, buy a property as a tangible asset or keep your money in the bank. The answer is obvious.
And on the other hand, if inflation hits a high and things become more expensive, property can hedge against inflation. Not cash. So again, buying a property, especially in a land scarce country like Singapore, won't go wrong.
Hi Arcachon,
I am just trying to think from a layman's POV. On the whole, global property prices have been rising in tandem with lower interest rates over the last decade. Ironically, property prices in US remain low in spite of all the printing and US being the epicentre of the crisis and quantitative easing. I notice that Singapore and Hong Kong property prices have surged the most over the last 2 years. This is most likely due to the very low interest rates in these 2 places. Naturally, the question becomes what will happen IF interest rates go up? I agree that there is no reason why interest rates need to go up. The only reason is to curb inflation. Thus, I believe interest rates will only go up when economy is doing very well, not when there is crisis looming in Europe. But does that mean, property will not crash if interest rates remain low? Not necessarily also as US property prices crashed because of subprime and remain low even as rates are low. Ditto Japan. Another thing is will this low interest rate era last forever since there is no incentive for any country to raise interest rates? If so, does that mean property prices in countries that have higher interest rates like Australia and Malaysia will have more legs to run when their interest rates are also reduced gradually towards zero?
" Not necessarily also as US property prices crashed because of subprime and remain low even as rates are low."
Subprime is not just a word, to equate Subprime and Singapore Property market is like comparing apple and orange.
Before the Subprime in the US you don't need to qualify for loan, it is given to you. You don't have to pay a deposit to buy property.
They don't believe in saving and the more they spend the more they think they save.
I was in US from Mar 2002 till Dec 2005 and really enjoy spending money. They have money back guarantee, 30 days no question ask return policy, customer satisfaction is their top policy and even give you money when you buy car call cash back policy.
If you buy an item and a year later found you don't like it you can return the item and they give you a voucher of the same value of the item you return.
If US is orange than Japan will be call a pear. In Japan they build highway to nowhere.
Our previous conservative government was in power for about 10 years. During that time our economy strengthened immensely on the back of a resources boom brought about by China's growth. During that time, the government paid off all the foreign government debt that had accumulated under the previous socialist regime and brought in a strong run of surplus budgets.
It was during this time also that because the of increased ability of the government to stimulate economic growth, unemployment was at record low levels, home ownership and wealth accumulation was subsequently on the increase. Dropping interest rates was not necessary to stimulate the economy as the economy was on a good roll.
Also, our borrowing laws are a lot tighter than other countries. Many of the fringe lending and debt buying nonsense undertaken by credit supplying institutions in the US particularly are illegal here in Australia, hence, loan defaulting isn't as prevalent.
All these things combined to put Australia in a strong position and able to cope better with the world economic downturn. Our last quarter is the first time we have had negative growth and only -0.5% at that (with 0.5% error) whereas other economies have been in recession for a year or more.
Having room to move on interest rates leaves us in a better position than other countries if the economy needs to be stimulated. The problem in the US and UK is they can't use interest rates to stimulate the economy so they have resorted to the worst possible solution..printing more money. It might bail them out in the short term but it will bite them in a couple of years.
http://au.answers.yahoo.com/question/index?qid=20090302214029AA6H0vg
Singapore do not have any natural resources.
Malaysia interest rate.
I still remember when I was young, lots of Tour bus from Malaysia use to park at old Airport Road Market, the exchange rate between Singapore and Malaysia is 1:1. Now the exchange rate is 1:2.4753. Will you put money in Malaysia or Singapore. They have oil, natural resource and water, why is their currency drop from 1:1 to 1:2.4753.
If interest rates are at 4-7%, what would be the economic realities then?
It is like in the uk too on the 30 days money back guarantee in the 90s.
" Not necessarily also as US property prices crashed because of subprime and remain low even as rates are low."
Subprime is not just a word, to equate Subprime and Singapore Property market is like comparing apple and orange.
Before the Subprime in the US you don't need to qualify for loan, it is given to you. You don't have to pay a deposit to buy property.
They don't believe in saving and the more they spend the more they think they save.
I was in US from Mar 2002 till Dec 2005 and really enjoy spending money. They have money back guarantee, 30 days no question ask return policy, customer satisfaction is their top policy and even give you money when you buy car call cash back policy.
If you buy an item and a year later found you don't like it you can return the item and they give you a voucher of the same value of the item you return.
If US is orange than Japan will be call a pear. In Japan they build highway to nowhere.
I dare predict that Property loan rates will stay below 3% for the next 5 years....
now till 2014 confirm below 1%, after 2015, 0.25% increase per quarter max... so you need 2 years to increase to 3% hence 2017...
Homeowners are practically getting free money from the bank from 2009 till now man.... if it last till 2015 then 7 years of free money!!!!!!!
Trapping-bird
03-06-12, 14:49
I dare predict that Property loan rates will stay below 3% for the next 5 years....
now till 2014 confirm below 1%, after 2015, 0.25% increase per quarter max... so you need 2 years to increase to 3% hence 2017...
Homeowners are practically getting free money from the bank from 2009 till now man.... if it last till 2015 then 7 years of free money!!!!!!!
Only you will think it's free money...
Only you will think it's free money...
Bought a 2 Bedroom for $535,000 in Southbank paid 20% = $107,000 + Stamp duty. Rent out since TOP for 2 years $96,000. Valuation during TOP is $1,550,000. If this is not free money I don't understand what is free money.
buttercarp
03-06-12, 17:23
Bought a 2 Bedroom for $535,000 in Southbank paid 20% = $107,000 + Stamp duty. Rent out since TOP for 2 years $96,000. Valuation during TOP is $1,550,000. If this is not free money I don't understand what is free money.
Wah, u really huat ah! :cheers4:
Wah, u really huat ah! :cheers4:
Only if I sell then can say Huat, now only paper gain.
There are 197 owner in Southbank. Some of the owner have 5, agent told me got one buy 18 unit. The one with 18 unit Huat big time.
buttercarp
03-06-12, 18:17
Only if I sell then can say Huat, now only paper gain.
There are 197 owner in Southbank. Some of the owner have 5, agent told me got one buy 18 unit. The one with 18 unit Huat big time.
Wah..... that one must be a foreigner?
Ya, huat 18 times.... good number somemore!
Wah..... that one must be a foreigner?
Ya, huat 18 times.... good number somemore!
Don't think is a foreigner. The project before launch all the 3 Bedroom sold out, within 1 week all 1 and 2 Bedroom sold out.
http://www.youtube.com/watch?v=E3fFg8XIS0k
Take note of the clothing the student wear from 1 to 4.
Printing money is an art, we have to thank him. For those who still yet to understand how to print money, please at least spend some time watching the video.
Thursday he will talk about economy again. Lets all gather here and listen
like in those bad old days?
Possible?
If that happens, property prices will DIVE. Might not be in the near future but maybe in 3 or 4 years time? Everyone is so used to the low rates now its kinda scary.
Property prices will dip for a while as highly leveraged owners cannot afford to service loan instalments, resulting in banks auctioning the houses. For those who weather through this short term dip, they are in for a good price appreciation as property prices will eventually adjust itself upwards to reflect the higher cost of money aka higher interest.
At the end of the day, interest rate does not determine property prices. It's supply and demand.
Have gone through such times and it is worth it to hold on. Still believe properties are bought to be kept especially good ones that are FH, CCR/City fringe, Condo/landed in particular, less than 8 minutes walk to mrt stn, etc.
Property prices will dip for a while as highly leveraged owners cannot afford to service loan instalments, resulting in banks auctioning the houses. For those who weather through this short term dip, they are in for a good price appreciation as property prices will eventually adjust itself upwards to reflect the higher cost of money aka higher interest.
At the end of the day, interest rate does not determine property prices. It's supply and demand.
Our previous conservative government was in power for about 10 years. During that time our economy strengthened immensely on the back of a resources boom brought about by China's growth. During that time, the government paid off all the foreign government debt that had accumulated under the previous socialist regime and brought in a strong run of surplus budgets.
It was during this time also that because the of increased ability of the government to stimulate economic growth, unemployment was at record low levels, home ownership and wealth accumulation was subsequently on the increase. Dropping interest rates was not necessary to stimulate the economy as the economy was on a good roll.
Also, our borrowing laws are a lot tighter than other countries. Many of the fringe lending and debt buying nonsense undertaken by credit supplying institutions in the US particularly are illegal here in Australia, hence, loan defaulting isn't as prevalent.
All these things combined to put Australia in a strong position and able to cope better with the world economic downturn. Our last quarter is the first time we have had negative growth and only -0.5% at that (with 0.5% error) whereas other economies have been in recession for a year or more.
Having room to move on interest rates leaves us in a better position than other countries if the economy needs to be stimulated. The problem in the US and UK is they can't use interest rates to stimulate the economy so they have resorted to the worst possible solution..printing more money. It might bail them out in the short term but it will bite them in a couple of years.
http://au.answers.yahoo.com/question/index?qid=20090302214029AA6H0vg
Singapore do not have any natural resources.
Does that mean Singapore also will have less flexibility as interest rates are already so low?
Does that mean Singapore also will have less flexibility as interest rates are already so low?
If you have a bank and people are pouring money into your Bank. What will you do, raise interest rate so that they don't pour money.:cheers4:
Where will you park your money if you can only bank it.
phantom_opera
04-06-12, 18:02
Investors hedged against global financial and economic crisis, heading for havens such as the benchmark 10-year Japanese government bond whose yield fell below 0.80 percent to its lowest since July 2003 :doh:
If you have a bank and people are pouring money into your Bank. What will you do, raise interest rate so that they don't pour money.:cheers4:
Where will you park your money if you can only bank it.
I thought the other way round? If too much liquidity, banks will lower interest rates. With interest rates so low, and if there is rampant inflation in the future, Singapore probably have to raise interest rates which makes property investment less profitable. On the other hand, if economy slows down, there is little room for rates to go down.
ikan bilis
04-06-12, 20:42
I thought the other way round? If too much liquidity, banks will lower interest rates. With interest rates so low, and if there is rampant inflation in the future, Singapore probably have to raise interest rates which makes property investment less profitable. On the other hand, if economy slows down, there is little room for rates to go down.
he forgot to put two '?'... read his post again with 2 additional '?'... ;)
he forgot to put two '?'... read his post again with 2 additional '?'... ;)
Thanks, I no good in English. Did not get a grade beyond E8 for English "O" level. Lucky nowadays got auto correction and Google to help but no auto punctuation mark and grammar.
If you have a bank and people are pouring money into your Bank. What will you do, raise interest rate so that they don't pour money.:cheers4:
Where will you park your money if you can only bank it.
No matter where I put the punctuation, still does not make sense. You mean banks dun have to raise interest rates because flushed with liquidity?
ikan bilis
05-06-12, 09:34
No matter where I put the punctuation, still does not make sense. You mean banks dun have to raise interest rates because flushed with liquidity?
don't know leh... but somehow i read as: :D
If foreigners are pouring money into sgp banks. What will sgp govt do,.. raise interest rate so that they don't pour money ?
and say, if wishes to take a big of risks than receiving near zero interest, where would you park your money next if only bank deposit is capital protected ?
:confused:
phantom_opera
05-06-12, 11:33
Singapore rate is pegged to US, period
Unlike Europe
http://graphics8.nytimes.com/images/2012/06/04/opinion/060412krugman1/060412krugman1-blog480.jpg
I thought the other way round? If too much liquidity, banks will lower interest rates. With interest rates so low, and if there is rampant inflation in the future, Singapore probably have to raise interest rates which makes property investment less profitable. On the other hand, if economy slows down, there is little room for rates to go down.
MAS or Singapore banks cannot anyhow suka suka raise interest rates as it is linked to the outside world. If they raise, all the other countries investment funds will flow into Singapore for deposits. Then what can the Singapore banks do to pay these funds interest? Take $$ from its people who borrowed housing loans to pay off these funds? Kill your own kids to pay ransome to others?
Interest rate hike happens when economy is overheated and need to contract abit.
With all the crisis around the western world, do u think our economy needs to contract?
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