View Full Version : SIBOR OR SOR?
Banks are offering SIBOR and SOR. Which is better in the next 2-3years?
proud owner
16-03-10, 10:08
Banks are offering SIBOR and SOR. Which is better in the next 2-3years?
banks offer SIBOR + xx pct , Or
SOR ,
SOR is swap offer rate , calculated using some formula , which takes into consideration USD funding rate and USD/SGD exchange rate ..
i dont see why one wants to subject themselves to USD risk/volatility ..
so SIBOR + X % is better
Property_Owner
16-03-10, 10:21
banks offer SIBOR + xx pct , Or
SOR ,
SOR is swap offer rate , calculated using some formula , which takes into consideration USD funding rate and USD/SGD exchange rate ..
i dont see why one wants to subject themselves to USD risk/volatility ..
so SIBOR + X % is better
China yuan will have an impact on the market in times to come
http://curiouscapitalist.blogs.time.com/2010/03/15/is-the-chinese-yuan-too-cheap/?xid=rss-topstories
Dun forget, it's still a Giant not fully woken up.
SOR volatility is high compare to SIBOR. I would prefer SIBOR.
SOR is currently 0.23% lower than SIBOR.
Still better to go with SIBOR?
It is momentary. In January SOR is almost on par with SIBOR.
If you expect USD to remain weak, go for SOR.
Many claim that SIBOR is better as SOR is more volatile. But volatility may be to your advantage as in the current situation where SOR is so much lower the SIBOR.
So, it is up to your risk profile. I am more risk loving. That is why I took up the 0.9% + SOR package with UOB instead of DBS 0.9% + SIBOR.
If spread for the sibor offer is lower than the Sor offer, it can mitigate the difference bettwen the current sor (lower than sibor)and sibor rate, i would more tilted towards sibor. I refer less volatile. Depend on your risk profile.
watch out for difference in cancellation penalty and lock in period as well.
Is the SOR rate as transparent as SIBOR and published on newspaper and same for all banks or SOR rate differs from bank to bank?
I prefer transparency and you know what you get and will get.
banks offer SIBOR + xx pct , Or
SOR ,
SOR is swap offer rate , calculated using some formula , which takes into consideration USD funding rate and USD/SGD exchange rate ..
i dont see why one wants to subject themselves to USD risk/volatility ..
so SIBOR + X % is better
The so-called volatility will self-correct all long term of 20 years or more. So I don't see much difference.
If you expect USD to remain weak, go for SOR.
Many claim that SIBOR is better as SOR is more volatile. But volatility may be to your advantage as in the current situation where SOR is so much lower the SIBOR.
So, it is up to your risk profile. I am more risk loving. That is why I took up the 0.9% + SOR package with UOB instead of DBS 0.9% + SIBOR.
Property_Owner
16-03-10, 16:58
Go for fixed better, anyway most like not selling due to SSD.
It's always a debate over sibor or sor
Is the SOR rate as transparent as SIBOR and published on newspaper and same for all banks or SOR rate differs from bank to bank?
I prefer transparency and you know what you get and will get.
SOR is as transparent as SIBOR. In this regard no difference.
btw, "published on newspaper" is not the benchmark. SOR and SIBOR are market fixings that happens every day 11AM.
SOR is by and large USD fx forward + USD funding rates (as if you are funding your funds in USD). I never really understand why UOB/OCBC uses SOR as their reference. In any case all local banks do not price their loans using any of the SIBOR/SOR rates. Any one from the local bank can divulge how they price it ?
In the last 10ys, 90% of the time SOR is higher than SIBOR. But then the current near 0 USD fed rate is also unique. So you make your bet.
I'll take Sibor + 0.9.
proud owner
16-03-10, 23:57
SOR is as transparent as SIBOR. In this regard no difference.
btw, "published on newspaper" is not the benchmark. SOR and SIBOR are market fixings that happens every day 11AM.
SOR is by and large USD fx forward + USD funding rates (as if you are funding your funds in USD). I never really understand why UOB/OCBC uses SOR as their reference. In any case all local banks do not price their loans using any of the SIBOR/SOR rates. Any one from the local bank can divulge how they price it ?
In the last 10ys, 90% of the time SOR is higher than SIBOR. But then the current near 0 USD fed rate is also unique. So you make your bet.
I'll take Sibor + 0.9.
SIBOR was ( is ) meant for Interbank, loans/deposits between banks ..
SOR ..was (is ) meant for non bank .. which MAS requires bank to add a reserve to it ..
traditioinally ..banks use SIBOR + reserve for customers ..
but different banks have different reserve due to many reasons ..and hence corporates want a standard quote from banks
so SOR .. works out well for all banks ..swapping USD to SGD ..and loan to corporates ..
hence SOR came into use..
at times SOR can fall below SIBOR .. but more often than not ..its higher ,,
also come close to month end, quarter end, half year end and yr end .. theres always huge demand for USD ...
hence the SOR soars ..
you may have lower SOR for 1mth but that 1 day for those high demand dates.. it can wipe out all the small gains ..
hence i always feel SIBOR is better
Go for Bank Board Rate + Discount. It offers the best of both worlds between variable and fixed.
Variable i.e. SIBOR / SOR are too volatile and therefore are priced the lowest. Can only go for them if no lock in period. But even if no lock in...when market crashes with interest rate hike... difficult to refinance as valuation would drop...so best to have extra cash to top up valuation loss
Variable Board Rate + Fixed Discount is relatively fixed if you study the trend for some of the banks' board rates. It is priced in between the variable and the fixed. Best of both worlds.
Fixed rate is safest but also priced highest. If you lock in for 2 yrs, you may lose out if variable rates remain low for the next 2 yrs.
So study carefully and make your choice wisely. The differential pricing between the variable and the fixed rates can worth a few hundreds of dollar savings per mth!!!
Go for fixed rate, SCB offering 1.25% fix for 1st year.
SIBOR was ( is ) meant for Interbank, loans/deposits between banks ..
SOR ..was (is ) meant for non bank .. which MAS requires bank to add a reserve to it ..
traditioinally ..banks use SIBOR + reserve for customers ..
but different banks have different reserve due to many reasons ..and hence corporates want a standard quote from banks
so SOR .. works out well for all banks ..swapping USD to SGD ..and loan to corporates ..
hence SOR came into use..
at times SOR can fall below SIBOR .. but more often than not ..its higher ,,
also come close to month end, quarter end, half year end and yr end .. theres always huge demand for USD ...
hence the SOR soars ..
you may have lower SOR for 1mth but that 1 day for those high demand dates.. it can wipe out all the small gains ..
hence i always feel SIBOR is better
Thanks for a very indepth explanation!:)
Maninthestreet
17-03-10, 11:04
Thanks for a very indepth explanation!:)
proudowner,
you have just made clear something i always ask the loan officers from the various banks, but cannot get a clear answer on what is the difference between sor and sibor...most times, they just show me the charts...and from it, i decided on sibor...don't know why, sibor pattern looks nicer... :)
For more info, please refer to the front-page article appearing in The Business Times today (17 March) entitled "Low-interest carrots to tempt home buyers: Latest home-loan skirmish also sees banks speeding up their approvals".
Go for Bank Board Rate + Discount. It offers the best of both worlds between variable and fixed.
I'm sorry I have to respond to this: NEVER NEVER EVER take "board" rate! NEVER EVER. There was a reason why DBS doing national service under the gun from MAS a few years back to start Sibor rates! Under the so called "board rate" system, banks raise rates 100% at will. Dun even dream of rates ever being fair ! Thanks to DBS we have now a fair floating rate system.
proud_owner, for academic discussion: I believe SOR is primarily decided by USDSGD forward. It's not a lending rate. For example in HK you have SOR CNY rates too, that's primarily depending on USDCNY NDF. Sibor is a lending rate. But the 11AM fixing is just a quote. SG is too small,a few big banks in ABS *can* dominate the quote in a way if they want to. Unlike Libor, which is far fairer and far difficult to control. So you can have clients that prefer SOR reference simply because SIBOR base is too small.
"Sibor reflects the interest rate that a bank charges another for the excess SGD it does not need. It is influenced by US interest rates and domestic loan demand.
SOR, on the other hand, includes bank funding costs. It is typically slightly higher than Sibor; but the last few months have seen SOR fall below Sibor." SOR is also influenced by USD-SGD rates.
Some bank executives or analysts recently opined that SGD will rise vs USD in near future (eg to S$1.37). This means SOR will remain low and hence SOR is preferred option?
In addition, another prominent Bank economist says the 3 month Sibor rate could stay below one per cent over the next two years; and the Federal Funds Target Rate (FFTR) may not have any change until late 2011. Another says the differential in servicing costs between a floating and fixed package can be substantial currently. Even if interest rates go up, it is expected to be gradual over time, not spike. Hence fixed rates not preferred option for now?
I'm sorry I have to respond to this: NEVER NEVER EVER take "board" rate! NEVER EVER. There was a reason why DBS doing national service under the gun from MAS a few years back to start Sibor rates! Under the so called "board rate" system, banks raise rates 100% at will. Dun even dream of rates ever being fair ! Thanks to DBS we have now a fair floating rate system.
proud_owner, for academic discussion: I believe SOR is primarily decided by USDSGD forward. It's not a lending rate. For example in HK you have SOR CNY rates too, that's primarily depending on USDCNY NDF. Sibor is a lending rate. But the 11AM fixing is just a quote. SG is too small,a few big banks in ABS *can* dominate the quote in a way if they want to. Unlike Libor, which is far fairer and far difficult to control. So you can have clients that prefer SOR reference simply because SIBOR base is too small.
I beg to differ. Although board rate is not transparent, it is a rate that applies across the board for all loan packages pegged to it. It is not by individual cases whereby they change board rate for A loan package, and remain same board rate for B loan package. The only thing that differs between different loan packages is the quantum of discounts eg. Board Rate minus 3% or minus 4% offered during different promotional periods. DBS for instance have not changed their prime rate since 2002!!!!
So to illustrate, a year ago, someone may have borrowed at Board Rate minus 1% versus today, another borrower may have secured Board Rate minus 3%. Do you think banks are stupid enough to raise their Board Rate that frequently or even raise 100% to chase away all existing and potential borrowers? :tsk-tsk:
The only fact is, the interest rate (pricing) offered by Board Rate package is in between variable and fixed rates package.
The higher the risk (volatility), the lower the cost - simple logic.
Again, if no lock-in, SOR or SIBOR offers best choice. But take into consideration, when these SOR or SIBOR rates rises, and you gonna need repricing or refinancing, you have to make sure your job / income stays intact because they will reassess your earning ability. If suay suay economy crashes, and you kena retrenched, you have to stick your neck long enough to keep paying high interest out of your savings until you find yourself a job so that you can refinance to a better deal. That is reality, and reality bites! :2cents: Then again, when the variable rates rise in due course, the fixed rate pricing also rises accordingly. So there won't be any better deal to refinance except for Board Rate packages which may still offer good hidden savings.
"Sibor reflects the interest rate that a bank charges another for the excess SGD it does not need. It is influenced by US interest rates and domestic loan demand.
SOR, on the other hand, includes bank funding costs. It is typically slightly higher than Sibor; but the last few months have seen SOR fall below Sibor." SOR is also influenced by USD-SGD rates.
Some bank executives or analysts recently opined that SGD will rise vs USD in near future (eg to S$1.37). This means SOR will remain low and hence SOR is preferred option?
In addition, another prominent Bank economist says the 3 month Sibor rate could stay below one per cent over the next two years; and the Federal Funds Target Rate (FFTR) may not have any change until late 2011. Another says the differential in servicing costs between a floating and fixed package can be substantial currently. Even if interest rates go up, it is expected to be gradual over time, not spike. Hence fixed rates not preferred option for now?
No one can tell you how interest rate will trend in the next 2 yrs or what package is the best to take. Maybe you can try a reliable fortune teller? :p
I would advise those who has large savings or think your job or income is relatively stable for the next 2 yrs to take up variable loan package with no-lock in. It offers the best savings, and you can refinance anytime when rates are not to your advantage.
It is not by individual cases whereby they change board rate for A loan package, and remain same board rate for B loan package.
of course it can be. especially when A and B are from a different period, say 1 month apart.
The only thing that differs between different loan packages is the quantum of discounts
this is what they want you to believe!
DBS for instance have not changed their prime rate since 2002!!!!
The very statement of this is already a sign: the rate should DROP!
Do you think banks are stupid enough to raise their Board Rate that frequently or even raise 100% to chase away all existing and potential borrowers? :tsk-tsk:
No. The bank will be *smart* enough to raise the rate to profit from you, while telling every one else yet another new "board rate" package.
The only fact is, the interest rate (pricing) offered by Board Rate package is in between variable and fixed rates package.
This is most definitely not.
when these SOR or SIBOR rates rises, and you gonna need repricing or refinancing
Look we are looking at *fair* rate. Sibor/SOR + spread is fair. If the whole economy is having an inflation rate of 9%, it's fully expected your mortgage has to be above 9%. Dun even dream abt having a "board rate" that will shield you from a market shift.
So there won't be any better deal to refinance except for Board Rate packages which may still offer good hidden savings. I cannot believe at this time and day, you still believe in board rate. Big mistake.
The very fact that "board rate" is not transparent, means the bank can do *whatever* they want. When a market rate is falling, the bank can still raise rates citing "other costs"! This happens all the time!
No one can tell you how interest rate will trend in the next 2 yrs or what package is the best to take. Maybe you can try a reliable fortune teller? :p
I would advise those who has large savings or think your job or income is relatively stable for the next 2 yrs to take up variable loan package with no-lock in. It offers the best savings, and you can refinance anytime when rates are not to your advantage.
Regardless of type of mortgage packages, all will be affected if and when interest rates head north. Difference is whether the spreads and BR discounts widen or narrow. BR also based on Sibor, just that banks add in other costs/fees to the formula and works out the discount to the BR. Sibor/SOR plus spread is simplier and more transparent to the laymen. Either way, same - pay more when rates rise.:tongue3:
of course it can be. especially when A and B are from a different period, say 1 month apart.
this is what they want you to believe!
The very statement of this is already a sign: the rate should DROP!
No. The bank will be *smart* enough to raise the rate to profit from you, while telling every one else yet another new "board rate" package.
This is most definitely not.
Look we are looking at *fair* rate. Sibor/SOR + spread is fair. If the whole economy is having an inflation rate of 9%, it's fully expected your mortgage has to be above 9%. Dun even dream abt having a "board rate" that will shield you from a market shift.
I cannot believe at this time and day, you still believe in board rate. Big mistake.
The very fact that "board rate" is not transparent, means the bank can do *whatever* they want. When a market rate is falling, the bank can still raise rates citing "other costs"! This happens all the time!
I don't think you work in a bank's loan department to know the mechanism well enough to make such claims.
Board rate means across the board, not individual rate. If not, why they use Board Rate + Discount to quote you? They might as well give you a single all-in rate. Different borrowers get different discounts from Board Rate depending on existing market interest rates at the time of signing the loan. The discouns is fixed throughout the loan tenure. The Board Rate isn't fixed so it is variable. But the Board Rate is applied across the board. Any increase or decrease in Board Rate is also applied across the board and affect all loan packages pegged to it, not just one or two loan packages. So imagine those who applied for Board Rate loan years ago with no discount versus one who applied for Board Rate loan now with discounts. Who will be more severely impacted when they raise Board Rate? And do you think Bank will anyhow raise Board Rate to chase away borrowers? :doh:
Use your brains to think and calculate facts, don't use your hot headed instinct to make wild assumptions. :tsk-tsk:
I read in newspapers about people complaining that banks rise board rates despite SIBOR rate falling. So board rate has no transparency and the rate is discretionary (just depend on the bank). Will bank using the discretionary and non-transparent board rate give you better deal than SIBOR? I think the answer is very obvious. My believe is - regardless of how volatile the SIBOR is, it is still much better than board rate. Furthermore, people who want less volatility can choose longer-period SIBOR (but I believe not much difference lah since they will average out over long periods).
I don't think you work in a bank's loan department to know the mechanism well enough to make such claims.
Board rate means across the board, not individual rate. If not, why they use Board Rate + Discount to quote you? They might as well give you a single all-in rate. Different borrowers get different discounts from Board Rate depending on existing market interest rates at the time of signing the loan. The discouns is fixed throughout the loan tenure. The Board Rate isn't fixed so it is variable. But the Board Rate is applied across the board. Any increase or decrease in Board Rate is also applied across the board and affect all loan packages pegged to it, not just one or two loan packages. So imagine those who applied for Board Rate loan years ago with no discount versus one who applied for Board Rate loan now with discounts. Who will be more severely impacted when they raise Board Rate? And do you think Bank will anyhow raise Board Rate to chase away borrowers? :doh:
Use your brains to think and calculate facts, don't use your hot headed instinct to make wild assumptions. :tsk-tsk:
I read in newspapers about people complaining that banks rise board rates despite SIBOR rate falling. So board rate has no transparency and the rate is discretionary (just depend on the bank). Will bank using the discretionary and non-transparent board rate give you better deal than SIBOR? I think the answer is very obvious. My believe is - regardless of how volatile the SIBOR is, it is still much better than board rate. Furthermore, people who want less volatility can choose longer-period SIBOR (but I believe not much difference lah since they will average out over long periods).
If u look hard enuf, some banks' board rate do not change that frequent. Eg. DBS since 2002until now...and it is not exactly non-transparent...they publish it on their website ;) I just have to say, I have a pretty good discounted Board Rate package that comes in between the variable and the fixed. If you get the variable package, you may not be able to sleep well whenever Fed Reserve raises their rates...
Also, not necessary banks will increase Board Rate whenever SIBOR rises. Bec Board Rate is already at a premium rate. Do you know how much paper work they need to do internally whenever they raise Board Rates?
And think it in another way, when SIBOR / SOR rates rises, 1st impact on the bank is existing or potential borrowers will be the first to shun away from variable packages, so banks will start to lose customers and later compete among each other to retain / attract borrowers. At this point in time, do you think banks will raise Board Rates at this time to lose more customers?
Common operandi - Quote you special rates (special big discounts) in 1st year, then you get locked in 2 years and you get slaughtered in 2nd year. DBS didn't change board rate since 2002? By the way, SIBOR is lowest in 2003 and now, means DBS never lower their rate to match real market rate?
If u look hard enuf, some banks' board rate do not change that frequent. Eg. DBS since 2002until now...and it is not exactly non-transparent...they publish it on their website ;) I just have to say, I have a pretty good discounted Board Rate package that comes in between the variable and the fixed. If you get the variable package, you may not be able to sleep well whenever Fed Reserve raises their rates...
Also, not necessary banks will increase Board Rate whenever SIBOR rises. Bec Board Rate is already at a premium rate. Do you know how much paper work they need to do internally whenever they raise Board Rates?
And think it in another way, when SIBOR / SOR rates rises, 1st impact on the bank is existing or potential borrowers will be the first to shun away from variable packages, so banks will start to lose customers and later compete among each other to retain / attract borrowers. At this point in time, do you think banks will raise Board Rates at this time to lose more customers?
Slaughtered in the 2nd yr? Nah...still enjoying gd rates for 1st and 2nd yr with lock-in. :) At least I can sleep well without worrying if a spike in SIBOR / SOR will cause me an arm or leg to service loan for any particular month. The time frame for Board Rate to react to sharp spikes in SIBOR / SOR is much longer, maybe a few months. By tat time, I oredi out of lock-in period.
Ask anyone in the streets - SIBOR / SOR is foreseen to go up than down. :cool: If you are stucked with a lock in with SIBOR - gd luck!
Anyway, I rest my case. No need to explain more since I do not get commission for selling DBS Prime Rate packages. Just get what you like. At the end of the day, don't regret and cry father cry mother!
There's this 'free reprice' but beware... it's been almost 3 months after my unit TOP yet the loan cannot be repriced to today's even lower rate - reason being the loan is 'not fully disbursed' yet. I wonder whether to laugh or cry given that 3 months after TOP the loan is not fully disbursed yet. Laugh because the monthly mortgage repayment is not the max - yet. Cry because I can't reprice to the (lower) new rates.
Slaughtered in the 2nd yr? Nah...still enjoying gd rates for 1st and 2nd yr with lock-in. :) At least I can sleep well without worrying if a spike in SIBOR / SOR will cause me an arm or leg to service loan for any particular month. The time frame for Board Rate to react to sharp spikes in SIBOR / SOR is much longer, maybe a few months. By tat time, I oredi out of lock-in period.
Ask anyone in the streets - SIBOR / SOR is foreseen to go up than down. :cool: If you are stucked with a lock in with SIBOR - gd luck!
Anyway, I rest my case. No need to explain more since I do not get commission for selling DBS Prime Rate packages. Just get what you like. At the end of the day, don't regret and cry father cry mother!
Analysts have positioned the low interest rate market phenomenon to last for another year at least until 2011.
Common operandi - Quote you special rates (special big discounts) in 1st year, then you get locked in 2 years and you get slaughtered in 2nd year. DBS didn't change board rate since 2002? By the way, SIBOR is lowest in 2003 and now, means DBS never lower their rate to match real market rate?
Banks say they never change 'board rate' but they can always change the '+' part. Eg. 'board rate + x%' the x they can change it anytime.
There is no point arguing which is the best rate to use because different people have different risk appetite and also different objectives...some look for lowest costs, some look for stability..etc
Usually Board rate are more stable, bank dun change their board rate all the time, so borrowers know their monthly payment. But the catch is there is no guarantee that the bank will not increase their board rate when their cost of funds rises...and at the same time, when their cost of funds drop, board rate will not drop to match it....
At this point in time, packages that are pegged to Sibor or SOR are giving better packages than Board rate......but when Sibor or SOR raises...who knows, Board rate could be better....
Anyway there were enough people being screwed by board rate previously...that's why they introduce the Sibor or SOR pegged packages...
blue u really didn't get it : the main reason why your board rate didn't change is simply because market rate is falling. there is no need to adjust board rate down. You are already losing money. The moment the market rate moves up, your board rate moves up even faster and bigger ! (e.g. board rate can move up by a full 1% at one time, do u know that ? sibor/sor goes by bps.)
there are enough past evidence to show u that. can ask jlrx to find the old newspaper forum complaints. (I myself already experienced twice. At that time I had no choice)
and fundamentally, thinking using "board rate" to shield against interest rate movement is just so wrong, I dun even know how to start to explain to you.
I'm not here to convince you since u already made up your mind. Good for you. The discussion between SOR or SIBOR is academic, between board rate is not. Frankly I was so shocked to see your 1st post, I almost thought you are a loan salesman in disguise. But since you are not, you are really a believer. Nothing will change your mind until you are hit by it. So let's just hope for the best for you.
btw take note abt ur "free conversion" clause. In most cases, the packages you can convert to are not the prevailing promotional packages of the bank at that time. It's the "packages applicable to you". Dun be too hopeful abt that. Most ppl refinance after 3ys. So the bank price the loan packages with a simple 3y horizon. Rate after that , "is academic".
What is the rate you are getting this year and next year?
Slaughtered in the 2nd yr? Nah...still enjoying gd rates for 1st and 2nd yr with lock-in. :) At least I can sleep well without worrying if a spike in SIBOR / SOR will cause me an arm or leg to service loan for any particular month. The time frame for Board Rate to react to sharp spikes in SIBOR / SOR is much longer, maybe a few months. By tat time, I oredi out of lock-in period.
Ask anyone in the streets - SIBOR / SOR is foreseen to go up than down. :cool: If you are stucked with a lock in with SIBOR - gd luck!
Anyway, I rest my case. No need to explain more since I do not get commission for selling DBS Prime Rate packages. Just get what you like. At the end of the day, don't regret and cry father cry mother!
What is the rate you are getting this year and next year?
Sorry, I am not supposed to disclose the rates because it is negotiated. But definately, it is only an inch higher than those 1 month SOR + x % (with lock-in) offered by other banks, and few inches lower than fixed rate (with lock-in) offered by other banks.
The rates are also comparable to those 3 mth SOR / SIBOR + x% less the volatility.
Anyway, it is just 2 years lock-in, so I am betting that DBS prime rate will not change for the next 2 years (given they have not changed since 2003 - it's published in their website newsroom for any change - thereby the transparency). Am prepared to refinance on the 3rd year when other packages are more attractive.
At least for DBS prime rate, I am more confident they are relatively fixed due to history. For other banks' board rates - take it with a pinch of salt...need to do your research.
My advice to anyone taking up bank loan is:
1) If you foresee market interest rates to trend up - go for fixed or relatively fixed
2) If you foresee market interest rates to remain low or trend down - go for variable
As mentioned previously, no one in the world can tell you how market interest rates will perform for the next 2 yrs because a lot of economic factors are involved. Given that market interest rates are at historical lows now, the only way for it to move is up!!!
SOR in general fluctuates more than SIBOR. If you are intending to buy and sell your property within a short period, go for no-lock in variable rates. If you intend to buy for own stay, you'll sleep better with fixed or relatively fixed rates.:spliff:
If you have loads of cash savings - variable (with no lock in) is the way to go!
Banks say they never change 'board rate' but they can always change the '+' part. Eg. 'board rate + x%' the x they can change it anytime.
This I beg to differ. The "+/- x%" is fixed under your loan agreement. Board rate is the one that is variable, but as I said, it is less volatile than SOR/SIBOR.
The "+/- x%" changes over time based on prevailing market conditions and bank promotions to attract customers. It is fixed once you signed on the dotted line. This applies to all SOR/SIBOR/Board Rate packages.
Analysts have positioned the low interest rate market phenomenon to last for another year at least until 2011.
Always take market analysts' words with a pinch of salt. If you invest in stock market, you will know how reliable these information or forecast are.
Cantonese famous saying: If there is prophecy, there are no beggars on the street.
proud owner
18-03-10, 11:45
This I beg to differ. The "+/- x%" is fixed under your loan agreement. Board rate is the one that is variable, but as I said, it is less volatile than SOR/SIBOR.
The "+/- x%" changes over time based on prevailing market conditions and bank promotions to attract customers. It is fixed once you signed on the dotted line. This applies to all SOR/SIBOR/Board Rate packages.
you are right
the +/- % is fixed under your loan contract ..
meanwhile Board rate is able to remain 'stable' is becos they are widened .. to cushion volatile SOR/SIBOR .. however much they move ..more often than not .. they still swing within the board rate ..
so board rate could well be the worst rates ..
you are right
the +/- % is fixed under your loan contract ..
meanwhile Board rate is able to remain 'stable' is becos they are widened .. to cushion volatile SOR/SIBOR .. however much they move ..more often than not .. they still swing within the board rate ..
so board rate could well be the worst rates ..
Board Rate packages are quoted as Board Rate - x%.
SOR/SIBOR packages are quoted as SOR/SIBOR + x%.
Board Rate does not change as much as SOR / SIBOR. There will be times when spikes in SOR/SIBOR resulting one in paying more interest than those under Board Rate packages. :spliff:
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