No more cheap mortgages as banks raise rates

http://www.straitstimes.com/Money/St...ry_246256.html

June 10, 2008

No more cheap mortgages as banks raise rates

Hike of up to 1 percentage point for some fixed rate packages to 3.98%

By Grace Ng, Finance Correspondent


THE days when you could lock in cheap mortgage rates for the first year or two seem to be over, now that banks have quietly jacked up rates for new fixed-rate loans.

Just five months ago, banks were dangling teaser rates on the first year of their fixed-rate home loan packages. Maybank had a package that offered 1.68 per cent, while United Overseas Bank's (UOB's) FirstZero product carried zero per cent.

But now, homebuyers would be hard-pressed to find rates fixed on the first year of a mortgage at below 2.68 per cent, as some banks had already raised the rates of certain packages by up to 1 percentage point in recent weeks to as high as 3.98 per cent.

UOB and OCBC Bank have raised rates for their three-year, fixed-rate mortgages to 3.68 per cent from 2.98 per cent. Standard Chartered Bank has raised its rate for its two-year, fixed-rate package to 3.78 per cent a year from about 2.68 per cent.

This means new home buyers will have to grapple with much higher costs of borrowing, if they want the certainty of locking in their interest rates for the next few years.

A new customer will fork out about $3,500 more in interest for the first year on a loan of about $500,000, if the rate has been raised by 0.7 percentage point.

Banks may have turned cautious and are raising mortgage rates amid a slowing property market and an uncertain economic outlook.

They are facing 'increased credit risks on housing loans', suggested Mr Dennis Ng of mortgage consultancy portal www.HousingLoanSG.com

The higher fixed rates may prompt more buyers of new homes to take up loans linked to transparent rates that they can easily monitor. These include the Singapore Interbank Offered Rate (Sibor) - the rate at which banks lend to each other - and the swap offered rate (SOR), which is Sibor plus a bank's lending costs.

Existing holders of home loans, whose fixed or variable rates are up for renewal in the coming months, may also find floating rates more attractive, as the difference between fixed rates and those linked to Sibor or SOR widens.

Customers with loans linked to the 12-month Sibor, which is hovering at about 1.7375 per cent, are still enjoying rates as low as 2.4 per cent that is fixed for a year - a difference of 1.3 of a percentage point compared to some newly-hiked, fixed-rate packages.

Some banks, however, have also started to raise rates linked to Sibor and the three-month SOR, currently at 1.4307 per cent. Some banks have raised their SOR-linked packages by 0.1 of a percentage point, or more, to as much as SOR plus 1 per cent.

DBS Bank has not changed its rates - yet. Market sources say the bank is preparing to introduce new - and higher - rates for both its fixed-rate and Sibor-linked packages in a few weeks.

Still, the banks' rate increases may raise eyebrows since the Sibor and United States Federal Reserve rates appear unlikely to climb sharply in the coming months.

Market talk that the Fed might soon raise interest rates to curb inflation was quashed last week, with an unexpectedly sharp surge in the US unemployment rate to 5.5 per cent last month.

One banker, who declined to be named, said the Singapore banking industry's motives for raising fixed rates this time, however, might 'have less to do with current Fed rates than expectations that Sibor is close to bottoming out'. Thus, market players may now be raising rates to squeeze higher margins from new loans.

A banking analyst said banks had enjoyed a roaring mortgage business in the past year, and some had already hit most of their 2008 targets.

'So, they may now be focusing on credit quality and growing their margins for any new loans,' he said.

The question on the minds of home owners is whether this fixed-rate mortgage hike is an ominous signal of an eventual rate hike for all other packages. This may cool the already lukewarm property market further.

Bankers, however, kept mum about their pricing strategy, pointing out instead that the current mortgage rates were still at historical lows.

[email protected]

Banks have been increasing their rates recently, with many banks offering Fixed 3 years @ 3.68% or 3.98%. There is even one that is offering 4.18%.

12M SIBOR has increased to 2% on June 13. All these indicate thatl banks are increasing their rates already.

However, if you are still looking for a home loan for new purchase or refinancing, I suggest that you can look at Bank A's which are still available until June 30.
They are still offering Fixed 3 years @ 2.98% with 0.75% cash rebate, so resulting in the average rate of 2.73% for each year after taking the cash rebate into account.

For the SIBOR package, if you sign in June, you will still enjoy June 2 Sibor rate of 1.687%. So you will be assured of paying 2.187% for your 1st year.

This is different from the package proclaimed to be as low as 1.04%. This is from Bank E. Personally I do not recommend this package to customers who still can take from Bank A because of the following reasons:

1) The 12M SIBOR will be determined only on the date of disbursement. SIBOR is on an upwards trend and it was 2% on June 13 and expected to go further up, so if your loan is only disbursed 3 months later in September, and the rate happen to be 2.5%, you will have to pay 2.5% + 0.85% = 3.35% for your 1st year. So there is the uncertainty of the 12M SIBOR which is quite risky to take.

2) There is a 1.5% cash rebate provided but it is subjected to clawback over 5 years if you convert to other packages within the bank, do partial redemption or full redemption.
1 - 12 Months = 100% payback to UOB
13 - 24 Months = 100% payback to UOB
25 - 36 Months = 75% payback to UOB
37 - 48 Months = 50% payback to UOB
49 - 60 Months = 25% payback to UOB

I suggest that if you have been putting off your refinancing due to the belief that SIBOR will continue to fall, you may like to consider doing so now because rates are on the rebound upwards. Whether it will drop is unknown.

if you feel comfortable with my advice, and would like to use my service, just contact me, Edward Sim @ 9187 2681 or [email protected] to find out more. I do not charge for the service as the banks will pay referral fees.

Hi All,

Last call for Bank A's packages which are DBS. They are withdrawing packages after June 30, so as of today there is still 6 working days before the Letter of Offer has to be signed by latest, June 30.

Till date, of the other few big local and foriegn banks, 2 have raised their 3 years fixed rate to 4.18% while another 2 have increased to 3.98%.

So for people who have bought HDB or Private that are already TOP or nearing TOP in the next 3 months, you may still apply for DBS Fixed 3 years @ 2.98% with 0.75% cash rebate.

As for those who are currently not with POSB/DBS, whether you are still within lock in or already out of lock in, you may apply for DBS Fixed 3 years @ 2.98% with 0.75% cash rebate.

For those who have bought BUC properties that are either Deferred Payment or Progressive Payment, you may like to apply for DBS package which is 12M SIBOR + 1% which has no lock in so there is so partial or full redemption penalty for disbursed loans, with only 0.75% cancellation charge for the undisbursed portion. As SIBOR is on the upwards trend with 1.92% as at June 19, if you sign the Letter of Offer in June, you can still enjoy the June 2 SIBOR rate of 1.687%, which brings your rate to 2.687% fixed for 12 months without any lock in penalty, except the cancellation charge of 0.75% for undisbursed portion.

Since I have already publicised that Bank A is DBS, those who have read are welcome to approach them directly. But if you would like to use my service and let me earn some referral fees, and also for appreciation of me sharing all the information upfront, please contact me, Edward Sim @ 9187 2681 or [email protected] to find out more. I do not charge customers for the service.

Recently Updated Packages

Below are the attractive packages of Banks A, B, C, D, and G for 80% financing. There are packages suitable for people currently within or without lock-in. If you would like to find out about 90% financing, kindly give me a call.

BANK A
3M SIBOR is currently 1.187 as at Sep 1.
12M SIBOR is currently 1.75 as at Sep 1.

Targeted towards New Purchase and Refinance (BUC & Completed Properties). No penalty on partial and full redemption for disbursed loan, and 0.75% cancellation penalty on un-disbursed loan. One time free conversion to other packages within 6 months after TOP (For BUC new purchase only. Not applicable to refinancing for BUC properties with penalty subsidy). 1% or 1.5% Penalty subsidy packages subjected to 3 years clawback pro-rated on a monthly basis also available below.

For Private only. Min $100K, but legal subsidy only for loan >$200K.

For 0.5% and without Penalty Subsidy Packages
3M SIBOR + 0.7% throughout

For 1% Penalty Subsidy Package
Year 1 = 3 Month SIBOR + 0.7%
Year 2 & 3 = 3 Month SIBOR + 0.95%
Thereafter = 3 Month SIBOR + 0.7%

For 1.5% Penalty Subsidy Package
Year 1 = 3 Month SIBOR + 0.7%
Year 2 & 3 = 3 Month SIBOR + 1.2%
Thereafter = 3 Month SIBOR + 0.7%

Deal or No Deal Refinancing Package (Completed Properties). No penalty on partial redemption for disbursed loan, and 1.5% cancellation penalty on un-disbursed loan. Full redemption penalty of 1.5% within 2 years.
You can have any combination for year 1 and 2, as long as the total markup for 2 years is 1%. See below for example. 0.5%, 1% or 1.5% Penalty subsidy packages subjected to 3 years clawback pro-rated on a monthly basis also available below.

For Private only. Min $500K.

Year 1 = 3 or 12M SIBOR
Year 2 = 3 or 12 Month SIBOR + 1%
Thereafter = 3 or 12 Month SIBOR + 0.7%

OR

Year 1 = 3 or 12M SIBOR + 0.5%
Year 2 = 3 or 12 Month SIBOR + 0.5%
Thereafter = 3 or 12 Month SIBOR + 0.7%

For 0.5% Penalty Subsidy Package
Add 0.25% to year 1 rate

For 1% Penalty Subsidy Package
Add 0.25% to year 1 and year 2 rate

For 1.5% Penalty Subsidy Package
Add 0.25% in Year 1 and 2 and 0.50% in Year 3

Perpetual Interest Servicing Package for New Purchase and Refinancing (BUC & Completed Properties)[/color][/b][/u]. No penalty on partial or full redemption for disbursed loan, and 1.5% cancellation penalty on un-disbursed loan.

For Private only. Min $500K.

3 or 12M SIBOR + 1.5% throughout

Bank B
3 Month SOR (Indicative purpose only) is currently 1.2276% as at Sep 1.

Targeted towards New Purchase (BUC & Completed Properties) . No penalty on partial and full redemption for disbursed loan, and 0.75% (BUC) and 1.5% (Completed) cancellation penalty on un-disbursed loan.

For Private only. Min $200K.

3M SOR + 0.7% throughout

Bank C
3 Month SIBOR (Indicative purpose only) is currently 1.1875% as at Sep 1.
12 Month SIBOR (Indicative purpose only) is currently 1.75% as at Sep 1.

Targeted towards New Purchase or Refinancing for people Currently WITHOUT Lock-in Penalty (TOP Properties). No penalty on partial and full redemption for disbursed loan. 1 time free conversion to other packages.

For Private and HDB. Min $100K

Year 1, 2 and 3 = 3 or 12 Month SIBOR + 0.8%
Thereafter = 3 or 12 Month SIBOR + 0.95%


Targeted towards New Purchase or Refinancing for people Currently WITHOUT Lock-in Penalty (TOP Properties). Fixed 2 years and lock in 2 years.

For Private and HDB. Min $100K

Year 1 & 2 = 3.25% Fixed
Thereafter = 3M SIBOR + 0.95%

Bank D
3 Month SIBOR (Indicative purpose only) is currently 1.1875% as at Sep 1.

Targeted towards New Purchase or Refinancing for people Currently WITHOUT Lock-in Penalty (BUC and Properties). No lock in for this package.

For Private and HDB. Min Private = $200K and Min HDB $100K.

Year 1, 2, 3 and thereafter = 3M SIBOR + 0.7%

Targeted towards New Purchase or Refinancing for people Currently WITH or WITHOUT Lock-in Penalty (Completed Properties). No lock in for this package.

Year 1 = 3 Month SIBOR + 0.75%
Year 2 = 3 Month SIBOR + 0.65%
Thereafter = 3 Month SIBOR + 0.55%

Targeted towards New Purchase or Refinancing for people Currently WITH or WITHOUT Lock-in Penalty (Completed Properties), 1% cash rebate on 1st loan disbursement will be given to you . No lock-in for this package but cash rebate subjected to clawback pro-rated monthly over 3 years.

For Private only. Min $200K.

Year 1, 2, 3 and thereafter = 3M SIBOR + 1%

Bank G
3M Cost of Funds (Indicative purpose only) is currently 1.47% at as at Sep 2.

Targeted towards New Purchase or Refinancing without using CPF, you can choose Principal and Interest scheme or just Interest-only scheme during your loan tenure. Suitable for customers who prefer interest-only loan at affordable interest rates. No Lock in for this package and free to do partial or full redemption with just 2 weeks notice.

For Private Only. Min US$150K or its S$ equivalent

Year 1, 2, 3 & thereafter = 3M Cost of Funds + 1%

Feel free to contact me, Edward Sim @ 9187 2681 or [email protected] find out more. In addition, if you need financing for other countries (Australia, New Zealand, US, Canada, UK, Spain, France, Portugal, Dubai, Hong Kong) with Singapore's interest rate, you may also look for me.

Recently Updated Packages as at Sep 5. Take a close look at Bank A, B and E's packages.

Below are the attractive packages of Banks A, B, C, D, E and G for 80% financing. There are packages suitable for people currently within or without lock-in. If you would like to find out about 90% financing, kindly give me a call.

BANK A
3M SIBOR is currently 1.187 as at Sep 1.
12M SIBOR is currently 1.75 as at Sep 1.

Targeted towards New Purchase and Refinance (BUC & Completed Properties) for customers Currently with or without Lock-In. No penalty on partial and full redemption for disbursed loan, and 0.75% cancellation penalty on un-disbursed loan. One time free conversion to other packages within 6 months after TOP (For BUC new purchase only. Not applicable to refinancing for BUC properties with penalty subsidy). 1% or 1.5% Penalty subsidy packages subjected to 3 years clawback pro-rated on a monthly basis also available below.

For Private only. Min $100K, but legal subsidy only for loan >$200K.

For 0.5% and without Penalty Subsidy Packages
3M SIBOR + 0.7% throughout

For 1% Penalty Subsidy Package
Year 1 = 3 Month SIBOR + 0.7%
Year 2 & 3 = 3 Month SIBOR + 0.95%
Thereafter = 3 Month SIBOR + 0.7%

For 1.5% Penalty Subsidy Package
Year 1 = 3 Month SIBOR + 0.7%
Year 2 & 3 = 3 Month SIBOR + 1.2%
Thereafter = 3 Month SIBOR + 0.7%

Deal or No Deal Refinancing Package (Completed Properties) for customers Currently with or without Lock-In . No penalty on partial redemption for disbursed loan, and 1.5% cancellation penalty on un-disbursed loan. Full redemption penalty of 1.5% within 2 years.
You can have any combination for year 1 and 2, as long as the total markup for 2 years is 1%. See below for example. 0.5%, 1% or 1.5% Penalty subsidy packages subjected to 3 years clawback pro-rated on a monthly basis also available below.

For Private only. Min $500K.

Year 1 = 3 or 12M SIBOR
Year 2 = 3 or 12 Month SIBOR + 1%
Thereafter = 3 or 12 Month SIBOR + 0.7%

OR

Year 1 = 3 or 12M SIBOR + 0.5%
Year 2 = 3 or 12 Month SIBOR + 0.5%
Thereafter = 3 or 12 Month SIBOR + 0.7%

For 0.5% Penalty Subsidy Package
Add 0.25% to year 1 rate

For 1% Penalty Subsidy Package
Add 0.25% to year 1 and year 2 rate

For 1.5% Penalty Subsidy Package
Add 0.25% in Year 1 and 2 and 0.50% in Year 3

Perpetual Interest Servicing Package for New Purchase and Refinancing (BUC & Completed Properties)[/color][/b][/u]. No penalty on partial or full redemption for disbursed loan, and 1.5% cancellation penalty on un-disbursed loan.

For Private only. Min $500K.

3 or 12M SIBOR + 1.5% throughout

Bank B
3 Month SOR (Indicative purpose only) is currently 1.2276% as at Sep 1.

Targeted towards New Purchase (BUC & Completed Properties) . No penalty on partial and full redemption for disbursed loan, and 0.75% (BUC) and 1.5% (Completed) cancellation penalty on un-disbursed loan.

For Private only. Min $200K.

3M, 6M or 12M SOR + 0.7% throughout

Targeted towards New Purchase or refinancing (Completed Properties with CSC obtained) with 1.5% Cash Rebate subjected to 100% clawback within 3 years. Legal subsidy is 0.4% of loan amount capped at $2.5K. No penalty on partial and full redemption for disbursed loan.

For Private only. Min HL $200K. TL $100K.

Year 1 = 3M SOR + 0.5%
Year 2 = 3M SOR + 0.75%
Thereafter = 3M SOR + 1%

Bank C
3 Month SIBOR (Indicative purpose only) is currently 1.1875% as at Sep 1.
12 Month SIBOR (Indicative purpose only) is currently 1.75% as at Sep 1.

Targeted towards New Purchase or Refinancing for people Currently WITHOUT Lock-in Penalty (TOP Properties). No penalty on partial and full redemption for disbursed loan. 1 time free conversion to other packages.

For Private and HDB. Min $100K

Year 1, 2 and 3 = 3 or 12 Month SIBOR + 0.8%
Thereafter = 3 or 12 Month SIBOR + 0.95%

Targeted towards New Purchase or Refinancing for people Currently WITHOUT Lock-in Penalty (TOP Properties). Fixed 2 years and lock in 2 years.

For Private and HDB. Min $100K

Year 1 & 2 = 3.25% Fixed
Thereafter = 3M SIBOR + 0.95%

Bank D
3 Month SIBOR (Indicative purpose only) is currently 1.1875% as at Sep 1.

Targeted towards New Purchase or Refinancing for people Currently WITHOUT Lock-in Penalty (BUC and Properties). No lock in for this package.

For Private and HDB. Min Private = $200K and Min HDB $100K.

Year 1, 2, 3 and thereafter = 3M SIBOR + 0.7%

Targeted towards New Purchase or Refinancing for people Currently WITH or WITHOUT Lock-in Penalty (Completed Properties). No lock in for this package.

Year 1 = 3 Month SIBOR + 0.75%
Year 2 = 3 Month SIBOR + 0.65%
Thereafter = 3 Month SIBOR + 0.55%

Targeted towards New Purchase or Refinancing for people Currently WITH or WITHOUT Lock-in Penalty (Completed Properties), 1% cash rebate on 1st loan disbursement will be given to you . No lock-in for this package but cash rebate subjected to clawback pro-rated monthly over 3 years.

For Private only. Min $200K.

Year 1, 2, 3 and thereafter = 3M SIBOR + 1%

Bank E

[color=red]Targeted towards New Purchase or Refinancing[color]. 4 years Fixed Rate Package. Penalty is pro-rated: 1.5% penalty within year 1, 1% in year 2 and 0.75% in years 3 and 4. Allows partial redemption up to 20% of initial loan within the 4 years lock in period.

For Private and HDB. Min $300K

Year 1 = 2.28% (Fixed)
Year 2 = 2.88% (Fixed)
Year 3 = 3.38% (Fixed)
Year 4 = 3.88% (Fixed)
Thereafter = 3.75% (Floating)

Bank G
3M Cost of Funds (Indicative purpose only) is currently 1.47% at as at Sep 2.

Targeted towards New Purchase or Refinancing without using CPF, you can choose Principal and Interest scheme or just Interest-only scheme during your loan tenure. Suitable for customers who prefer interest-only loan at affordable interest rates. No Lock in for this package and free to do partial or full redemption with just 2 weeks notice.

For Private Only. Min US$150K or its S$ equivalent

Year 1, 2, 3 & thereafter = 3M Cost of Funds + 1%

Feel free to contact me, Edward Sim @ 9187 2681 or [email protected] find out more. In addition, if you need financing for other countries (Australia, New Zealand, US, Canada, UK, Spain, France, Portugal, Dubai, Hong Kong) with Singapore's interest rate, you may also look for me.