View Full Version : what will happen if interest rate is 4%?
I am wondering what will happen if interest rate goes back to normal at around 4%?
Based on todays prices, it would seem that prices needs to drop like 40% if we want to keep the monthly payments the same based on a 40 year loan.
I find it really scary that a lot of singaporeans are buying houses based on the assumption that interest rate will keep at 1%. People were taking out huge loans at 1% interest rates with a 40 year tenure so the monthly payments are small. This is like REALLY super risky and the governent knows it and thus they have cut the tenure.
The governemnt HAS to do something now to avoid a similar fate like Spain. Do we want to bet the economy of our country on that the interest rate will stay low?
I mean we have no control over external interest rates.... why are we exposing ourselves to such a risk?
you ask anyone why they are buying at todays prices. The only reason is that they believe the interest rates will stay at 1%. All the maths only makes sense if the interest rates stay low.
Cyberknight
18-10-12, 22:16
When the bank calculates how much to lend you, it is based on an interest rate of 3.75%. So that should take care of e 40year loans.
When the bank calculates how much to lend you, it is based on an interest rate of 3.75%. So that should take care of e 40year loans.
no it does not actually. If the interest rates rises from 1% to 4%, the monthly repayment will go up like 66%, with most of the money going to repay INTEREST in the first few years.
A 40 year loan DOES NOT make sense at a normal interest rate of 4%. This is maths....
Example a 1million 40 year loan at 4% means your monthly payment is $4178 compared to $2528.
But that is not all. After FIVE LONG years payment at 4% interest, your principal has dropped by less than 4% total.... which is plainly ridiculous as almost all your payments is just paying interest. So if you are to sell after FIVE years, you lose basically lost almost all your money spend servicing the loan (they are all interest payments)
It is just maths... if interest rates are low, the penalty for stretching your loans longer is much less.
Perhaps, you can repay for 40 years until you are 75 but is that what you want to be doing?? As it will mean that spending the rest of your life servicing the interest payments. Now at 1% interest rate, the story is so different as the loans are serviced by the rental and you get "free" monthly income.
auroraborealis
18-10-12, 22:31
ideally, the grand plan is (but of course, talk is cheap):
1st start only @ 60% LTV (for all properties if own > 2 properties)
2nd every 50bp above 4%, target to prepay 5% of outstanding loan until LTV (based on mkt valuation) fall to < 50%
the direction of property prices also matter;
above is contingency for either no change in property prices (i.e. 2012 current values) or a fall of 25% in property prices
if property prices up > 25% by then, just have to sell 1 property to bring down LTV for the rest to < 50%
the ability to prepay depends on cash/liquid asset holdings; how much % of cash/liquid asset do we hold for every $1mio property we own?
I am wondering what will happen if interest rate goes back to normal at around 4%?
Based on todays prices, it would seem that prices needs to drop like 40% if we want to keep the monthly payments the same based on a 40 year loan.
I find it really scary that a lot of singaporeans are buying houses based on the assumption that interest rate will keep at 1%. People were taking out huge loans at 1% interest rates with a 40 year tenure so the monthly payments are small. This is like REALLY super risky and the governent knows it and thus they have cut the tenure.
The governemnt HAS to do something now to avoid a similar fate like Spain. Do we want to bet the economy of our country on that the interest rate will stay low?
I mean we have no control over external interest rates.... why are we exposing ourselves to such a risk?
you ask anyone why they are buying at todays prices. The only reason is that they believe the interest rates will stay at 1%. All the maths only makes sense if the interest rates stay low.
High interest rate can also mean that the US and world economies are good. So prices may not necessarily fall but yield will be very challenging
the direction of property prices also matter;
above is contingency for either no change in property prices (i.e. 2012 current values) or a fall of 25% in property prices
if property prices up > 25% by then, just have to sell 1 property to bring down LTV for the rest to < 50%
the ability to prepay depends on cash/liquid asset holdings; how much % of cash/liquid asset do we hold for every $1mio property we own?
If the interest rates are rising to 4%, do you think the prices will go up or down? Actually it doesn't really matter how much assets you hold. If there interest rates goes up so much, the rental yield will be wiped out and everyone will be rushing to sell as it is POINTLESS to hold on to property with heavy loans. you just bleed money every month.
Even if you can hold, would you want to hold if interest rates are rising?
auroraborealis
18-10-12, 22:39
why not? if i/r goes up means economy likely to be doing much better than current... if current rental yield is 4-5%, there's also a possibility that rental rates go up in line...
defintiely hold in this scenario... unless i/r up but asian doom & gloom like in 98... but global dynamics are changing significantly
think 1 or 3 mth sibor was >9% back then... but then again, sibor-based loans didn't exist back then
If the interest rates are rising to 4%, do you think the prices will go up or down? Actually it doesn't really matter how much assets you hold. If there interest rates goes up so much, the rental yield will be wiped out and everyone will be rushing to sell as it is POINTLESS to hold on to property with heavy loans. you just bleed money every month.
Even if you can hold, would you want to hold if interest rates are rising?
If interest rate rise to 4%, means world economy super good? Almost everyone earning much more than previously and have a lot of money so rental yield wipe out never mind, they are in no hurry to sell!
Singapore economy super good means need more manpower, in will come more foreigners, property prices up, rental up when interest rate up, why need to sell? Your logic doesn't stand up to scrutiny... :p
If the interest rates are rising to 4%, do you think the prices will go up or down? Actually it doesn't really matter how much assets you hold. If there interest rates goes up so much, the rental yield will be wiped out and everyone will be rushing to sell as it is POINTLESS to hold on to property with heavy loans. you just bleed money every month.
Even if you can hold, would you want to hold if interest rates are rising?
Cyberknight
18-10-12, 22:48
no it does not actually. If the interest rates rises from 1% to 4%, the monthly repayment will go up like 66%, with most of the money going to repay INTEREST in the first few years.
A 40 year loan DOES NOT make sense at a normal interest rate of 4%. This is maths....
Example a 1million 40 year loan at 4% means your monthly payment is $4178 compared to $2528.
But that is not all. After FIVE LONG years payment at 4% interest, your principal has dropped by less than 4% total.... which is plainly ridiculous as almost all your payments is just paying interest. So if you are to sell after FIVE years, you lose basically lost almost all your money spend servicing the loan (they are all interest payments)
It is just maths... if interest rates are low, the penalty for stretching your loans longer is much less.
Perhaps, you can repay for 40 years until you are 75 but is that what you want to be doing?? As it will mean that spending the rest of your life servicing the interest payments. Now at 1% interest rate, the story is so different as the loans are serviced by the rental and you get "free" monthly income.
I mean when the bank assess your ability to pay, it is based on 3.75% interest generally speaking. On top of that. The current interest rate env is likely to stay low for the next 2-3 years.
Even when interest do rise. You will have already enjoyed 2-3 years of low interest that is enough to reduce e principal.
General rule of thumb to prevent over leveraging. 50% of the monthly installment should go into principal repayment, that will keep e
Loan repayment in check.
why not? if i/r goes up means economy likely to be doing much better than current... if current rental yield is 4-5%, there's also a possibility that rental rates go up in line...
defintiely hold in this scenario... unless i/r up but asian doom & gloom like in 98... but global dynamics are changing significantly
think 1 or 3 mth sibor was >9% back then... but then again, sibor-based loans didn't exist back then
I don't understand the coorelation. Using your arguement, since now interest rates are record low, it means economy is doing terrible and prices should fall right???
Interest rate low, housing price up. Interest rate up, housing price also up. What sort of logic is that. I don't think interest rates going up necessarily means economy is doing well as you also have mentioned.
If we want to analyse, we cannot change too many variables at one go right? Then how to analysis. You can say interest rates go up, but government bring in 10 more million FT so rental go up even higher....
I mean when the bank assess your ability to pay, it is based on 3.75% interest generally speaking. On top of that. The current interest rate env is likely to stay low for the next 2-3 years.
Even when interest do rise. You will have already enjoyed 2-3 years of low interest that is enough to reduce e principal.
General rule of thumb to prevent over leveraging. 50% of the monthly installment should go into principal repayment, that will keep e
Loan repayment in check.
yup the point was people was taking like 40 years loan so 2-3 years of super low interest rates does not really mean much to the principal...
The governemnt HAS to do something now to avoid a similar fate
MAS has already done something. 60% LTV, max loan tenure etc.
On the other hand, if you know interest rate will be 0 until at least 2015, you should do something too.
interest rate was at 4% in 2006, and what did that year feel like? good bonuses, good increments, buy any stock also make money.
Now interest rate is low because economy is doing terrible, look at US, Europe, Japan and you will know.
When economy super up up up, interest rate sure up one! But economy up up up means property prices up up up! :p
Now economy super bad but housing prices up is an anomaly....... :beats-me-man:
I don't understand the coorelation. Using your arguement, since now interest rates are record low, it means economy is doing terrible and prices should fall right???
Interest rate low, housing price up. Interest rate up, housing price also up. What sort of logic is that. I don't think interest rates going up necessarily means economy is doing well as you also have mentioned.
If we want to analyse, we cannot change too many variables at one go right? Then how to analysis. You can say interest rates go up, but government bring in 10 more million FT so rental go up even higher....
auroraborealis
18-10-12, 23:03
Current low rate is due to weak G3 economies but Asia is doing quite fine arent we? Which is exactly y our prices r going up... Ok SG economy + External liquidity boost from G3
I don't understand the coorelation. Using your arguement, since now interest rates are record low, it means economy is doing terrible and prices should fall right???
Interest rate low, housing price up. Interest rate up, housing price also up. What sort of logic is that. I don't think interest rates going up necessarily means economy is doing well as you also have mentioned.
If we want to analyse, we cannot change too many variables at one go right? Then how to analysis. You can say interest rates go up, but government bring in 10 more million FT so rental go up even higher....
MAS has already done something. 60% LTV, max loan tenure etc.
On the other hand, if you know interest rate will be 0 until at least 2015, you should do something too.
ok but until 2015.... that is the point. People are so short sighted. They believe that they can get out before the interest rates goes up.
Imagine if government does not do more, people will just buy more at todays prices.
I really don't think the prices will go up much more as almost everyone has factored in the low interest rates. The interest rates really cannot go any lower.
I think people buy mainly for the rental yield. it is their second property. The rental yield numbers do looks ok based on current interest rates. But how much can you earn based on rental for 2-3 years?
When the majority of the population is stuck with housing loans at todays prices and interest rates shoot up to a NORMAL 4%, everyone will suffer. The economy will probably crash. Granted that this is a hypthetical scenario but the risk is there and I feel that it is too great to be ignored. Just need to look at Spain or Ireland whose economical woes are brought about by the housing crash
Current low rate is due to weak G3 economies but Asia is doing quite fine arent we? Which is exactly y our prices r going up... Ok SG economy + External liquidity boost from G3
my point exactly. So how can you assume when G3 economies recover and interest rates goes up, Asia will not have economic downturn? So the arguement that when interest rates goes up, our economy sure good is just err....
auroraborealis
18-10-12, 23:12
Possible but I can't think of a trigger? Perhaps u can suggest one
Our economy is not sure gd but even when it's bad it's not the worst, stability is of value to foreign investors in our properties
my point exactly. So how can you assume when G3 economies recover and interest rates goes up, Asia will not have economic downturn? So the arguement that when interest rates goes up, our economy sure good is just err....
@wind30: our MAS is not bad already. Irish pty bubble. I know of ppl borrowing 100% buying multiple properties in Ireland. THAT is irresponsible central banking. Here with as low as 60 to 40% LTV, it already greatly reduced the risk.
Possible but I can't think of a trigger? Perhaps u can suggest one
Our economy is not sure gd but even when it's bad it's not the worst, stability is of value to foreign investors in our properties
??? Uncle, you think I PHD in economics. How do I know of a trigger for economic downturn in Asia 3 years down the road???
Does it mean if you and I don't know of a trigger that that it is unlikely to have economic downturn 3 years down the road?
One year before 2007 people was still laughly at peter Schiff
the trigger will sneak in on the investors at the most unexpected moment. some call it the black swan. if one could describe the bearish scenario, it won't be called the black swan anymore.
auroraborealis
18-10-12, 23:30
Well then it's for the ppl who buy to assess the risks... For me, it's low probability (< 25%) of that to happen
So y not take adv of the low rates now, I.e more of the ongoing mthly p+I payments actually goes into paying down the principal compared to when rates r higher
Y not take a stand on where I think Asia is heading... For me, stronger
Y not invest cautiously by not over leveraging... For me, LTV max 60%
Take a chance... If cannot, dun buy loh
??? Uncle, you think I PHD in economics. How do I know of a trigger for economic downturn in Asia 3 years down the road???
Does it mean if you and I don't know of a trigger that that it is unlikely to have economic downturn 3 years down the road?
One year before 2007 people was still laughly at peter Schiff
I am wondering what will happen if interest rate goes back to normal at around 4%?
George Soros- "The Man Who Broke the Bank of England" because of his US$1 billion in investment profits during the 1992 Black Wednesday UK currency crisis.
He will be very happy if interest rate goes back to normal at around 4%.
Some can stomach the increased loan burden. Some cannot.
Of those who cannot, some will sell and cut loss, some will tiao lao, some will borrow from tai ee long but still tiao lao eventually.
From some of the replies you get, you know you want whatever it is they are smoking because no matter how they toss the coin and regardless if it's head or tail, they still win.
But don't fight the trend. Mkt can remain irrational longer than you can tahan. So said a wise man, Keynes I think.
Some can stomach the increased loan burden. Some cannot.
Of those who cannot, some will sell and cut loss, some will tiao lao, some will borrow from tai ee long but still tiao lao eventually.
From some of the replies you get, you know you want whatever it is they are smoking because no matter how they toss the coin and regardless if it's head or tail, they still win.
But don't fight the trend. Mkt can remain irrational longer than you can tahan. So said a wise man, Keynes I think.
I agree. From the individual standpoint, perhaps a case can be made to buy now due to the low interest rate. Ultimately, even if you don't buy, if the housing market crash, you also die if the economy tanks. So might as well join in the crowd.
But from the GOVERNMENT standpoint, it does not make sense for them to let prices go up anymore. The CMs must come harder and stronger and faster. They should not let singapore be subjected to excessive risk of a property bubble.
I agree. From the individual standpoint, perhaps a case can be made to buy now due to the low interest rate. Ultimately, even if you don't buy, if the housing market crash, you also die if the economy tanks. So might as well join in the crowd.
But from the GOVERNMENT standpoint, it does not make sense for them to let prices go up anymore. The CMs must come harder and stronger and faster. They should not let singapore be subjected to excessive risk of a property bubble.
Their hands are tied by macroeconomic factors outside of this island.
Don't think govt will want to crash the property market by doing CMs harder stronger faster because this is akin to doing suicide themselves, if not sooner, at least till next GE.
I agree. From the individual standpoint, perhaps a case can be made to buy now due to the low interest rate. Ultimately, even if you don't buy, if the housing market crash, you also die if the economy tanks. So might as well join in the crowd.
But from the GOVERNMENT standpoint, it does not make sense for them to let prices go up anymore. The CMs must come harder and stronger and faster. They should not let singapore be subjected to excessive risk of a property bubble.
When the bank calculates how much to lend you, it is based on an interest rate of 3.75%. So that should take care of e 40year loans.
Really? Means I should be safe.. Nvr thought abt it
MAS has already done something. 60% LTV, max loan tenure etc.
On the other hand, if you know interest rate will be 0 until at least 2015, you should do something too.
U know I was sharing with my armerican colleague in London about sg policies. He wished that US has not been so reckless that led to subprime. SG still good lah...
Don't think govt will want to crash the property market by doing CMs harder stronger faster because this is akin to doing suicide themselves, if not sooner, at least till next GE.
If they can crash the market by cm it just mean that there is a huge bubble. Else they can always reverse the cm then the market turns. If it is a bubble it is always better to deflate now rather than later. If the bubble is burst by external factors like rising interest rates, the results will be far worse.
Well then it's for the ppl who buy to assess the risks... For me, it's low probability (< 25%) of that to happen
So y not take adv of the low rates now, I.e more of the ongoing mthly p+I payments actually goes into paying down the principal compared to when rates r higher
Y not take a stand on where I think Asia is heading... For me, stronger
Y not invest cautiously by not over leveraging... For me, LTV max 60%
Take a chance... If cannot, dun buy loh
If you have seen how property investors "run road" back in 1997.... I think you will think otherwise.
Like yourself, many friends of mine shared the same school of thought like you. Not sure about you but almost all of them think they can run ahead of market and they will "surely" be able to "sell" before the storm coming...
They were investing heavily, highly geared and all "kaput" when the melt down occurred. Imagine price is dropping 10-20k each week..... Very tough for them to stomach.... Banks start calling for "topping up" the differences....
Today, out of the 7 pals, two suvived. One of of them is myself (conservative) One rebound with gusty gambled on 2009 property recovery...now heavily geared again and he think he will be able to ride thru since interests is low. He is using rental to finance the loans... He has to stuck with his current banks as he can only max loan to 21yrs (with the new rules) with 4 properties geared at 80% loans. Inaddition, he cash out profits by refinancing his properties (purchased during 2008//2009) to final a new property recently @ 60% loan.
Two of his units were advertised for rental and as newly top, competition for rental is very intense. It took around 2 months before finding someone to rent (with lower rental too, barely enough to cover loans (property loan and refinancing loans) going with current interest...
I hope he will be fine.
Personally, I think market is not rational...
so @ 4% interest, many will rush to sell... especially those who hold a few properties or locked in on 'low' rental contracts.
And, SG property market has been very resilient to cooling measures. Some people don't seem to be aware that SG is a small fish in the global market and like some mentioned here, our economy (and jobs) depends very much on the global economy.
But this time it's different...:D
If you have seen how property investors "run road" back in 1997.... I think you will think otherwise.
Like yourself, many friends of mine shared the same school of thought like you. Not sure about you but almost all of them think they can run ahead of market and they will "surely" be able to "sell" before the storm coming...
They were investing heavily, highly geared and all "kaput" when the melt down occurred. Imagine price is dropping 10-20k each week..... Very tough for them to stomach.... Banks start calling for "topping up" the differences....
Today, out of the 7 pals, two suvived. One of of them is myself (conservative) One rebound with gusty gambled on 2009 property recovery...now heavily geared again and he think he will be able to ride thru since interests is low. He is using rental to finance the loans... He has to stuck with his current banks as he can only max loan to 21yrs (with the new rules) with 4 properties geared at 80% loans. Inaddition, he cash out profits by refinancing his properties (purchased during 2008//2009) to final a new property recently @ 60% loan.
Two of his units were advertised for rental and as newly top, competition for rental is very intense. It took around 2 months before finding someone to rent (with lower rental too, barely enough to cover loans (property loan and refinancing loans) going with current interest...
I hope he will be fine.
Absolutely. You think you can run when something happen but the fact is that your leg goes wobbly .. you can't move an inch. It is like being caught in a 911 tower "kind of feeling" . There is nothing you can do ..and wait for building to collapse with you.
Westman is lao jiao .. been thru the mills and survived.
Listen to the W(ise)estman :D
Absolutely. You think you can run when something happen but the fact is that your leg goes wobbly .. you can't move an inch. It is like being caught in a 911 tower "kind of feeling" . There is nothing you can do ..and wait for building to collapse with you.
Westman is lao jiao .. been thru the mills and survived.
Listen to the W(ise)estman :D You don't bluff small chewren lah. Where got so scary? :scared-4:
You don't bluff small chewren lah. Where got so scary? :scared-4:
The fact is that small chewran will always learn the hard way ...b'cos they have no past experience to fall back on ... and that's why adult always give good meaning advice to small chewran b'cos they were small chewran and they learn their hard lesson before growing into adult. How about that. :D
But this time it's different...:D
different for how long ?
auroraborealis
19-10-12, 14:36
Oh no... I will buy but won't sell, that's y comfortable LTV is impt. Won't sell becos smaller units can rent out till we retire, then take back to stay & bigger units keep for kids... With the kind of development in property mkt in SG, I worry more we'll become more n more like HK.
Nowadays, a BTO in reasonably gd estate cost almost double (compared to those 7-8 years back; I mean those that were applied b4 07 but top after 08). If young couple strive to fully pay hdb b4 investing in pc... Think it'll take them double the time. Think I posted b4... They prob be in the 35-40 age gp; compared to the current 30-35 age gp (with fully paid hdb)
With inflation outpacing savings & interest rate, I feel I need to help kids build a base, else they end up only able to own 600sqft condo as a start... Compared to us who typically own 1200sqft condo as a start in the good old days
If you have seen how property investors "run road" back in 1997.... I think you will think otherwise.
Like yourself, many friends of mine shared the same school of thought like you. Not sure about you but almost all of them think they can run ahead of market and they will "surely" be able to "sell" before the storm coming...
They were investing heavily, highly geared and all "kaput" when the melt down occurred. Imagine price is dropping 10-20k each week..... Very tough for them to stomach.... Banks start calling for "topping up" the differences....
Today, out of the 7 pals, two suvived. One of of them is myself (conservative) One rebound with gusty gambled on 2009 property recovery...now heavily geared again and he think he will be able to ride thru since interests is low. He is using rental to finance the loans... He has to stuck with his current banks as he can only max loan to 21yrs (with the new rules) with 4 properties geared at 80% loans. Inaddition, he cash out profits by refinancing his properties (purchased during 2008//2009) to final a new property recently @ 60% loan.
Two of his units were advertised for rental and as newly top, competition for rental is very intense. It took around 2 months before finding someone to rent (with lower rental too, barely enough to cover loans (property loan and refinancing loans) going with current interest...
I hope he will be fine.
u guys need to watch "doom days prepers"
Allthepies
19-10-12, 18:34
If u have experience with stock trading, you will fare better with property investment. Stock can move up and down 10-20% in a single day or become junk in a single day. Property is much much less volatile.
Never heard that banks calling to top up differences unless the person fails to pay on-time in the first place... :beats-me-man:
If you have seen how property investors "run road" back in 1997.... I think you will think otherwise.
Like yourself, many friends of mine shared the same school of thought like you. Not sure about you but almost all of them think they can run ahead of market and they will "surely" be able to "sell" before the storm coming...
They were investing heavily, highly geared and all "kaput" when the melt down occurred. Imagine price is dropping 10-20k each week..... Very tough for them to stomach.... Banks start calling for "topping up" the differences....
Today, out of the 7 pals, two suvived. One of of them is myself (conservative) One rebound with gusty gambled on 2009 property recovery...now heavily geared again and he think he will be able to ride thru since interests is low. He is using rental to finance the loans... He has to stuck with his current banks as he can only max loan to 21yrs (with the new rules) with 4 properties geared at 80% loans. Inaddition, he cash out profits by refinancing his properties (purchased during 2008//2009) to final a new property recently @ 60% loan.
Two of his units were advertised for rental and as newly top, competition for rental is very intense. It took around 2 months before finding someone to rent (with lower rental too, barely enough to cover loans (property loan and refinancing loans) going with current interest...
I hope he will be fine.
Looking at the costs of buying a property now and into the future, and looking back at the transactions I made, I am having seller's remorse many times over! Should listen to jlrx - "The time to sell is NEVER"! Sell already cannot buy back at even same price! :banghead:
Oh no... I will buy but won't sell, that's y comfortable LTV is impt. Won't sell becos smaller units can rent out till we retire, then take back to stay & bigger units keep for kids... With the kind of development in property mkt in SG, I worry more we'll become more n more like HK.
Nowadays, a BTO in reasonably gd estate cost almost double (compared to those 7-8 years back; I mean those that were applied b4 07 but top after 08). If young couple strive to fully pay hdb b4 investing in pc... Think it'll take them double the time. Think I posted b4... They prob be in the 35-40 age gp; compared to the current 30-35 age gp (with fully paid hdb)
With inflation outpacing savings & interest rate, I feel I need to help kids build a base, else they end up only able to own 600sqft condo as a start... Compared to us who typically own 1200sqft condo as a start in the good old days
auroraborealis
19-10-12, 22:31
It happen the last property mkt crashed... For eg. If beginning LTV is 80%, if property price drop by 40%, basically the loan o/s > property value & bank will request for paydown of at least 30% of original loan to bring LTV to 90% based on latest valuation.
Never heard that banks calling to top up differences unless the person fails to pay on-time in the first place... :beats-me-man:
Looking at the costs of buying a property now and into the future, and looking back at the transactions I made, I am having seller's remorse many times over! Should listen to jlrx - "The time to sell is NEVER"! Sell already cannot buy back at even same price! :banghead:
Lol.. Yes.. JLRX is the master!
His quotes and posts are always so funny and enlightening.
But it's true hor.. Sell already cannot never buy back at same price..
I also believe this time is different..
With all these new mrt line and population increased, we r well supported.
Prices will move up gradually but no crash lah.
Buy what u can afford.
This time round, the difference is 60 ltv. Prices need to drop 40% for force sales to happen. For prices to fall 40%, force sales need to happen... See they are inter related? One doesn't happen without the other.:cheers4:
I personally have not encountered any cases of bank asking to "top up" for myself, or ppl I know. From 1997 till today. I cannot speak with absolute certainty that this never happened, but honestly I doubt a bank will really do that : if a person is paying the mortgage, why would a bank force someone to top up equity immediately which simply means the loan immediately goes to bad loans book ? In a crisis the last thing a bank wants to hear is a loan goes bad.
This time MAS has done its job. At 60% LTV, very few would face immediate hardship if interest rates resume to normal, after 4 long years. There is risk to take on leverage no doubt, but there is also opportunity. That's life. How many 5yrs cycle do you have in yr life ? Especially for the group in their 30s, they have not reached their max earning capacity. This group has the max to gain and least to risk. This is what differentiates those who make it, and those who don't.
May i know if 4% is the norm?
Has there been cases where interest hit more than 4%-7%?
May i know if 4% is the norm?
Has there been cases where interest hit more than 4%-7%?
discussed here:
http://forums.condosingapore.com/showpost.php?p=338060&postcount=104
if you look at average, only 2.7%.. + your spread. of coz during uncertainty there will be spikes in interest rate. as long as you have some buffer, it is ok. if you using the rental to cover instalments in full and have no buffer cash, then better start building now.
Thank you. This is pretty optimistic :)
discussed here:
http://forums.condosingapore.com/showpost.php?p=338060&postcount=104
if you look at average, only 2.7%.. + your spread. of coz during uncertainty there will be spikes in interest rate. as long as you have some buffer, it is ok. if you using the rental to cover instalments in full and have no buffer cash, then better start building now.
once you add in the spread, it is pretty close to 4%..
I was paying 4.25% in 2007.
The Printing machine is not on yet.
http://www.brimg.net/images/charts/charticle-2.gif
What the Fed did
The Fed initiated purchases of $500 billion in mortgage-backed securities.
It announced purchases of up to $100 billion in debt obligations of mortgage giants Fannie Mae, Freddie Mac, Ginnie Mae and Federal Home Loan Banks.
The Fed cut the key interest rate to near zero, Dec. 16, 2008.
In March 2009, the Fed expanded the mortgage buying program and said it would purchase $750 billion more in mortgage-backed securities.
The Fed also announced it would invest another $100 billion in Fannie and Freddie debt and purchase up to $300 billion of longer-term Treasury securities over a period of six months.
The quantitative easing program, or QE1, concluded in the first quarter of 2010, with a total of $1.25 trillion in purchases of mortgage-backed securities and $175 billion of agency debt purchases.
Read more: http://www.bankrate.com/finance/federal-reserve/qe1-financial-crisis-timeline.aspx#ixzz2F2lZSYS2
Follow us: @Bankrate on Twitter | Bankrate on Facebook
End of QE2: financial crisis timeline
By Polyana da Costa • Bankrate.com
Mortgage rates and the Fed
Click through the timeline below to see the effect the Fed's moves had on mortgage rates.
End of QE2: June 30, 2011
What the Fed did
As previously announced, the Fed concluded its $600 billion bond purchasing program.
QE2 was conducted at an even pace, and the end date was telegraphed from the start of the program.
What was expected
When the program was about to end, some mortgage experts feared rates would rise.
What happened
Mortgage rates have tumbled since QE2 ended and have recently reached record lows.
Read more: http://www.bankrate.com/finance/federal-reserve/end-qe2-financial-crisis-timeline.aspx#ixzz2F2mIRvvZ
Follow us: @Bankrate on Twitter | Bankrate on Facebook
QE3 launches: Financial crisis timeline
By Polyana da Costa • Bankrate.com
Mortgage rates and the Fed
Click through the timeline below to see the effect the Fed's moves had on mortgage rates.
QE3: Sept. 13, 2012 to present
What the Fed did
The Fed is planning to buy another $40 billion in mortgage-backed investments each month until the economy improves. That's on top of the tens of billions of dollars in mortgages it already had been buying each month, making U.S. banks flush with cash.
The central bank continues to sell short-term bonds and use the money to buy long-term bonds.
The time period during which the Fed will keep interest rates near zero was extended from the end of 2014 to mid-2015.
What was expected
QE3 was expected to hold rates down or reduce them on mortgages and other financial instruments. It was hoped that with a new cash injections, banks would lend out the money and give the economy a boost.
What happened
The 30-year and 15-year fixed-rate mortgages initially fell but have since bounced up and down.
Read more: http://www.bankrate.com/finance/federal-reserve/qe3-financial-crisis-timeline.aspx#ixzz2F2lybf8D
Follow us: @Bankrate on Twitter | Bankrate on Facebook
Which is correct?
1. The property price have increased since 2005.
2. The Value of money have depreciated since 2005.
QE∞ is now QE∞er, and QE4 is official as the Fed announces $45 billion in NEW unsterilized monthly treasury bond purchases, exactly as expected by the market.
FED INCREASES QE WITH $45 BILLION IN NEW MONTHLY TREASURY PURCHASES
FED TO CONTINUE MORTGAGE BONDS PURCHASES AT $40 BILLION PER MONTH
OPERATION TWIST EXPANDED INTO UNSTERILIZED BOND MONETIZATION
MONTHLY PURCHASES TO TOTAL $85 BILLION
FED: RATES TO STAY EXCEPTIONALLY LOW WITH JOBLESS ABOVE 6.5%
http://www.silverdoctors.com/qe4-fed-announces-45-billion-in-unsterilized-monthly-treasury-purchases/
QE∞ is now QE∞er, and QE4 is official as the Fed announces $45 billion in NEW unsterilized monthly treasury bond purchases, exactly as expected by the market.
FED INCREASES QE WITH $45 BILLION IN NEW MONTHLY TREASURY PURCHASES
FED TO CONTINUE MORTGAGE BONDS PURCHASES AT $40 BILLION PER MONTH
OPERATION TWIST EXPANDED INTO UNSTERILIZED BOND MONETIZATION
MONTHLY PURCHASES TO TOTAL $85 BILLION
FED: RATES TO STAY EXCEPTIONALLY LOW WITH JOBLESS ABOVE 6.5%
http://www.silverdoctors.com/qe4-fed-announces-45-billion-in-unsterilized-monthly-treasury-purchases/
Inflation will be terrible for the lower income class. Hope of some of the higher stamp duties and property tax revenues go to them in the form of utilities, transport and education subsidies.
Inflation will be terrible for the lower income class. Hope of some of the higher stamp duties and property tax revenues go to them in the form of utilities, transport and education subsidies.
Everyone is aspiring to be a landlord to hedge against such future re-enactments/pain.
Everyone is aspiring to be a landlord to hedge against such future re-enactments/pain.
Too crowded playing field now.
I'm working on plan B.
Too crowded playing field now.
I'm working on plan B.
You got in early sis. Thumbs up.
Not much meat left.
Too crowded playing field now.
I'm working on plan B.
yes. once the market get saturated...rental yield will dive...
this happen to my business industry with so many competitors around.. you have to work so extra hard just to get customer..
The Printing machine is not on yet.
huh?
not turn on with these Q1-3?
You got in early sis. Thumbs up.
Not much meat left.
Bro, there is meat. You need to know where to look and you need to have a fat wallet to store the approx 45% of the value of the condo.
Hahahahaha:cheers4:
When will it saturate?
yes. once the market get saturated...rental yield will dive...
this happen to my business industry with so many competitors around.. you have to work so extra hard just to get customer..
Too many exciting projects launching in the next 6 months. Got to accumulate more bullets.
Bro, there is meat. You need to know where to look and you need to have a fat wallet to store the approx 45% of the value of the condo.
Hahahahaha:cheers4:
Bro, there is meat. You need to know where to look and you need to have a fat wallet to store the approx 45% of the value of the condo.
Hahahahaha:cheers4:
yea lor.. not easy for late-comer. :(
When will it saturate?
me don't know :(
look around your condo...see got many new condo TOP soon or not..
Too many exciting projects launching in the next 6 months. Got to accumulate more bullets.
wa..plan to get in next year?
Which is correct?
1. The property price have increased since 2005.
2. The Value of money have depreciated since 2005.
yes to both. problem is which one more than the other.
yes to both. problem is which one more than the other.
Why problem!??? The problem is when u hold cash since 2005... It depreciates. You are not hedged. The depreciation can only get u half of a condo compared to 2005 (in absolute dollars). If u leverage, cm will make your life even more miserable. :(
Why problem!??? The problem is when u hold cash since 2005... It depreciates. You are not hedged. The depreciation can only get u half of a condo compared to 2005 (in absolute dollars). If u leverage, cm will make your life even more miserable. :(
once again another good reply from a seasoned bro...:)
Also depends when you enter. Sense already made and made and move on.
Why problem!??? The problem is when u hold cash since 2005... It depreciates. You are not hedged. The depreciation can only get u half of a condo compared to 2005 (in absolute dollars). If u leverage, cm will make your life even more miserable. :(
huh?
not turn on with these Q1-3?
I was paying 4.25% in 2007.
The Printing machine is not on yet refer to 2007
The Printing machine start in 2008.
http://www.brimg.net/images/charts/charticle-2.gif
Now QE4 printing 85 Billion a month. Still thinking of how to get hold of the money.
I was paying 4.25% in 2007.
The Printing machine is not on yet refer to 2007
The Printing machine start in 2008.
http://www.brimg.net/images/charts/charticle-2.gif
Now QE4 printing 85 Billion a month. Still thinking of how to get hold of the money.
me too. exactly same rate in same year. uob? lol
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