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Thread: Home loans tied to falling bank rate draw interest

  1. #1
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    Default Home loans tied to falling bank rate draw interest

    May 19, 2007

    Home loans tied to falling bank rate draw interest

    Loans based on Sibor get cheaper but if Sibor rises, so would loan rate

    By Grace Ng, FINANCE REPORTER


    A PLUNGE in a key interest rate has triggered a rush of enquiries from local borrowers about mortgages that let them cash in on cheaper money.

    The rate - called the Singapore Interbank Offered Rate (Sibor) - hit a 20-month low of 2.3758 per cent yesterday and has fallen almost one percentage point since Feb 28.

    This is starting to add up to cheap interest rates for home owners who took out mortgages tied to Sibor, which reflects the cost at which banks borrow money from each other.

    As the Sibor falls, so do their rates. But it's a gamble: if the Sibor rises, so does your mortgage rate.

    Most are still paying slightly more than the rates offered for more standard loans. But if the Sibor keeps falling, the differential may go the other way, particularly as standard loan rates are stubbornly refusing to fall despite the banks' access to cheaper money.

    The Sibor-linked loan packages have become a hot ticket in recent months.

    Borrowers like the increased transparency over how their rates are set and the chance to enjoy lower payments when the Sibor falls.

    United Overseas Bank has seen 'a healthy level' of interest, while DBS Bank has received 'thousands of enquiries' over the past four months, although more traditional loans are still preferred.

    The take-up rate for its Sibor-linked product 'has increased by about seven times since January', said Mr Koh Kar Siong, DBS' head of secured loans for consumer banking.

    Standard Chartered Bank is the latest to meet the demand with the launch yesterday of a Sibor-linked loan.

    DBS charges a premium of an annual 1 per cent over the Sibor rate, while UOB and OCBC Bank add an annual 1 per cent over the three-month, six-month or nine-month Swap Offer Rates (SOR). The SOR comprise the Sibor plus a bank's lending costs.

    Stanchart adds an annual 0.5 per cent premium over the three-month SOR - now at 2.4503 per cent - for the first year. It also guarantees that the SOR will not exceed the 2.95 per cent annual rate for the first two years - a market first.

    UOB's head of loans, Mr Kevin Lam, said the 'vast majority' of customers taking up its package chose the three-month SOR as this rate moves faster with Sibor.

    DBS and UOB said loans for Sibor-linked products are larger than the average home loans in their portfolio.

    DBS' average Sibor-loan size is about $700,000, reflecting the 'more financially savvy investors' who take out loans for larger properties, said Mr Koh.

    They are betting that Sibor-linked rates will eventually dip below fixed and floating board rates, which range from 3.25 to 4 per cent.

    These rates are not likely to be lowered for now, as banks said the drop in the Sibor is 'a recent phenomenon' and there is uncertainty if its decline will be sustained.

    'The general view is that mortgage rates are unlikely to be lowered this year, as they tend to lag behind deposit rates and interbank rates,' said Mr Tan Chia Seng, Citibank's business director.

    But at least they are unlikely to rise. Any upside in rates 'appears to be very much limited at this point in time', Mr Koh said.

    OCBC, which some mortgage brokers say has 'not been pushing its SOR loans as aggressively as DBS and UOB', said it has not had a big take-up of its Sibor-linked loans, despite more enquiries.

    Even if Sibor fell further to make such packages more attractive, many people might remain wary as the Sibor can go up as well as down.

    It was this concern that prompted Stanchart to offer a guaranteed maximum interest rate to give clients security.

    That preference for predictability has seen DBS' Home Ideal package, which is pegged to the stable CPF rate, experience a higher take-up than Sibor-linked packages.

    Its take-up has shot up 13 times since last November, said Mr Koh.

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  2. #2
    Unregistered
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    Default Housing Loan Information required

    Security : If the property is tenanted,an assignment of the tenancy agreement

    The above is from the term and conditions for housing loan approval .pls throw some light on what this means ?
    appreciated !

  3. #3
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    Default Re: Home loans tied to falling bank rate draw interest

    Dearer Home Loans For Halifax Customers
    Updated:15:39, Friday April 04, 2008

    In a further sign of the global economic slowdown, Britain's biggest mortgage lender - the Halifax - has announced plans to charge more for home loans.
    Under the changes customers with deposits of at least 25% will typically pay 0.1% less.

    But customers with smaller deposits will be hit with higher rates of interest.

    Someone borrowing between 90% and 95% of their home's value will pay up to 0.35% more than now.

    Those borrowing between 10% and 24.9% will pay around 1.4% more.

    Halifax says it will no longer advance mortgages of up to 97% of a property's value.

    The new tiers will apply to the group's entire mortgage range, with its current 136 deals being replaced with 201 new ones.

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    It is also launching a new range of loans specifically aimed at first-time buyers, including a five-year fixed-rate deal of 5.69%.

    Halifax said it had introduced the changes in response to market conditions and to reward people for being prudent.

    The changes will also apply to Bank of Scotland and Intelligent Finance.

    They come at the end of a week that has seen the number of different mortgage products available fall by 13%.

    Lenders including the Co-operative Bank have withdrawn deals that were attracting too much business, while others have left the market altogether.

    They blame the global credit squeeze which has made borrowing a lot more difficult.

  4. #4
    Unregistered
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    Default Re: Home loans tied to falling bank rate draw interest

    Security : If the property is tenanted,an assignment of the tenancy agreement

    The above is from the term and conditions for housing loan approval .pls throw some light on what this means ?
    appreciated !

  5. #5
    Unregistered
    Guest

    Default Re: Home loans tied to falling bank rate draw interest

    Is the mortgage loan available for the property within first year of buying .This is for the property i am staying in?

  6. #6
    Unregistered
    Guest

    Default Re: Home loans tied to falling bank rate draw interest

    what is the SIBOR for April 2008 ???

  7. #7
    Unregistered
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    Default Re: Home loans tied to falling bank rate draw interest

    Quote Originally Posted by Unregistered
    what is the SIBOR for April 2008 ???
    any property finance consultant .what is the best loan package in market now ?

  8. #8
    STAMP DUTY
    Guest

    Default Re: Home loans tied to falling bank rate draw interest

    can the stamp duty on apartment purchase be paid thru a credit card or does this payment needs to be done thru Cheque only???

  9. #9
    Unregistered
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    Default Re: Home loans tied to falling bank rate draw interest

    Harlow Mr funny ..can help with tis
    Quote Originally Posted by STAMP DUTY
    can the stamp duty on apartment purchase be paid thru a credit card or does this payment needs to be done thru Cheque only???

  10. #10
    mrs funny
    Guest

    Default Re: Home loans tied to falling bank rate draw interest

    Quote Originally Posted by STAMP DUTY
    can the stamp duty on apartment purchase be paid thru a credit card or does this payment needs to be done thru Cheque only???

    my husband is not around. it is friday nite and he is having happy time outside with his frens

    maybe I can answer your question. payment must be done through cheque only.

  11. #11
    Melissa Thang
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    Default Re: Home loans tied to falling bank rate draw interest

    Quote Originally Posted by Unregistered
    any property finance consultant .what is the best loan package in market now ?
    Hi, I'm Melissa Thang, a home loan mortgage consultant working with a panel of banks providing free consultancy service to my clients.

    Do you still need a home loan? If you still do, please feel free to call or email me so that I can work out something for you and provide you with a free, no obligation home loan mortgage consultation you need.

    Melissa Thang
    Accredited Mortgage Consultant
    Global Creatif Financial
    9180 8166
    [email protected]

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