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View Full Version : Home Loan Review: May Bank’s Three Years Fixed Package



Zeng Han Jun
06-03-09, 08:56
By: Zeng Han Jun, CPCG, Singapore



May Bank’s latest home loan package come as good news to real estate investors amid the gloomy financial market. With most of the banks tuning up on the interest rates for fixed home loan packages, May Bank actually went south with their latest home loan package.




With interest rates for three consecutive years being: 1st Year), 1.6% 2nd Year), 2.2% 3rd Year) 2.9%, the numbers are even lower than some of the other banks’ floating interest rated home loans. The surprising thing is that the interest rates are fixed. Market turmoil has caused rates cutting measures around the globe and inter bank lending rates for Singapore too has reached extremely low levels. For the past few months, the 3 months Sibor rate has maintained itself below 0.8%. Although inter bank lending rates have been dwelling in the trough of the interest rate cycle, banks have instead offered home loan packages that are fixed at significantly higher rates. Clearly the banks are cautious about pricing their home loans at a lower rate because of uncertainty of how the interest rates might move in the future. Which was why May Bank’s new package comes as a good news at the moment.




One big drawback that local real estate investors and owners might find from this home loan package is that it is pegged to an internal board rate. According to a research survey that I have done last year, real estate investors and owners alike favor home loans that are pegged to rates like Sibor and SOR. With the home loan offered by May Bank being pegged to an internal board rate, consumers might find that there is a lack of transparency in the determination of the rate.




This point is offset by the fact that it is structured fixed for three years, therefore making movement of the internal board rate an irrelevant issue. However, the internal board rate is an issue to deal with when the loan goes out of lock in period.


This article from CPCG is currently being protected by Singapore and International Copyright Laws. However please feel free to republish this article, provided that you include working links to our website: http://www.cpcgonline.com and http://www.cpcgonline.blogspot.com. We appreciate your kind gesture. For any enquiries, please email us at [email protected].

latour
06-03-09, 22:56
By: Zeng Han Jun, CPCG, Singapore



May Bank’s latest home loan package come as good news to real estate investors amid the gloomy financial market. With most of the banks tuning up on the interest rates for fixed home loan packages, May Bank actually went south with their latest home loan package.




With interest rates for three consecutive years being: 1st Year), 1.6% 2nd Year), 2.2% 3rd Year) 2.9%, the numbers are even lower than some of the other banks’ floating interest rated home loans. The surprising thing is that the interest rates are fixed. Market turmoil has caused rates cutting measures around the globe and inter bank lending rates for Singapore too has reached extremely low levels. For the past few months, the 3 months Sibor rate has maintained itself below 0.8%. Although inter bank lending rates have been dwelling in the trough of the interest rate cycle, banks have instead offered home loan packages that are fixed at significantly higher rates. Clearly the banks are cautious about pricing their home loans at a lower rate because of uncertainty of how the interest rates might move in the future. Which was why May Bank’s new package comes as a good news at the moment.




One big drawback that local real estate investors and owners might find from this home loan package is that it is pegged to an internal board rate. According to a research survey that I have done last year, real estate investors and owners alike favor home loans that are pegged to rates like Sibor and SOR. With the home loan offered by May Bank being pegged to an internal board rate, consumers might find that there is a lack of transparency in the determination of the rate.




This point is offset by the fact that it is structured fixed for three years, therefore making movement of the internal board rate an irrelevant issue. However, the internal board rate is an issue to deal with when the loan goes out of lock in period.


This article from CPCG is currently being protected by Singapore and International Copyright Laws. However please feel free to republish this article, provided that you include working links to our website: http://www.cpcgonline.com and http://www.cpcgonline.blogspot.com. We appreciate your kind gesture. For any enquiries, please email us at [email protected].

This will surely create some more competition among the banks, and quite sure a few banks will be coming out with their products and package to compete for market share. These are likely to aim at refinancing rather than new loans I think, and add more pressure for those having properties going to TOP in the next 6 months or so. Banks will be so busy fighting the refinancing share of the market.

hans
06-03-09, 23:25
This will surely create some more competition among the banks, and quite sure a few banks will be coming out with their products and package to compete for market share. These are likely to aim at refinancing rather than new loans I think, and add more pressure for those having properties going to TOP in the next 6 months or so. Banks will be so busy fighting the refinancing share of the market.

I am not too sure about that, the banks are too scare to do business, unless they are desperate for market share