Sibor rises to 0.734% - almost double the year-ago rate

[vboy]

Sibor rises to 0.734% - almost double the year-ago rate
By
Siow Li [email protected]@SiowLiSenBT
24 Feb6:04 PM
THE key three-month Sibor or Singapore interbank offered rate continues to rise; at 0.734 per cent on Tuesday, it's almost double the rate one year ago due to continued US dollar strength. The three-month Sibor was 0.389 per cent on Feb 21, 2014.
From last Wednesday, the three-month Sibor on which most mortgages are priced off is up 7 per cent and the forecast is for more US dollar strength and higher interest rates.
"It's a function of US dollar strength," said Alvin Liew, United Overseas Bank senior economist.
UOB expects the US dollar to end the year at S$1.40, up from S$1.36 now, and the three-month Sibor to reach one per cent by then.
Said Selena Ling, OCBC Bank head, treasury research & strategy: "Our six- and 12-month forecasts for three-month Sibor are 0.8 per cent and 0.95 per cent respectively.
"There are upside risks mainly due to the SGD weakness, coupled with the firmer direction from US short-term interest rates ahead of a potential lift-off by the US Federal Reserve around middle of the year."
Another benchmark interest rate - the three-month SOR or swap offer rate - which is typically used for commercial loans, also rose to a 52-week high of 0.944, up more than 5 per cent from last Wednesday.

[stl67]

i thought yellen said patience... how come they so impatient??

[pmet]

i thought yellen said patience... how come they so impatient??

LOL you really entrust your money to one woman?

Yellen 自身难保

"Audit the Fed" is printed everywhere in Congress

[henryhk]

Only 0.74%, so kan Cheong..... 4% then come and blow trumpet! I ever pay 6.75% also take it easy!! Hahaha

[henryhk]

Highest is 14% in 1998 and lowest sibor is 0.25% in 2011, my bank loan contract clearly states, so wat the complaining at tis time!

[darkseed73]

That's what I was thinking, most of us whom took bank loan few years ago probably is 0.75 + 3-m Sibor so even if Sibor raise to 1, it's 1.75%.

If u change to fix, it's 1.88 + you have to pay "admin fees" and it lasts only 3 years the most which u have to redo the whole process again.

Come-on, when sibor is 2% (matching HDB 2.6%) then panic blah.

[stl67]

I ever paid 5.5%.. but then again, it would be nice to continue with such low rates.. but don't have then boh pian... life still have to goes on..

[MortgageGuru]

Yes.
I agree to some of you saying that back then when you took up 0.75% spread Yu all are still not affected much even if SIBOR is at 1%
but have you all take into account of the comparison?
If you're using 1.75% against the current benchmark of 1.88% Fixed 3 years.
If SIBOR hit with 1.5%, easily you pay much more already.
In additon to those who procrastinate earlier when rates were still low at 3 years fixed 1.25,1.45,1.55 offered by banks, you've already saved much more and more than enough to cover your 'admin fees'
3 years fixed 1.25,1.45,1.55 compared to market rate of about 2% by end of this year, and a conservative 2.5% for the next 2 years, you'll save more than 10k for a loan more than 500k with 20 years to go at least for the next 3 years.

It does not mean that holding on a low spread despite SIBOR being high won't affect you much.
If the only way is up now, It affects deeply, and true enough, for the next 2 years will definitely be up.

[mummy]

I tried to refinance my sibor linked loan with Maybank but they say cannot as loan not yet fully disbursed though already TOP. Is that the case with all banks? So I cannot refinance?

[MortgageGuru]

You can refinance still, but there will be a penalty of 1.5% for usual case.

[mummy]

1.5% of what?

[MortgageGuru]

1.5% of the undisbursed loan amount.
which means to say if you got 15% of your purchase amount of 1m yet to disbursed to developer.
You will have $150k still yet to be paid to developer whereby 1.5% of it will be $2250.

[teddybear]

There is always 2-sides of a coin.......

E.g., A takes up SIBOR + 0.75% spread fixed. Pay loans for 20 years.

B takes up fixed 1.25, 1.45, 1.55% for 3 years, then end up have to pay SIBOR + 1.25% spread, pay loans for 20 years.

Who will be better off?
I believe A is better off than B in such scenario...........
Imagine difference in spread between A and B is 0.5%, that is a lot to pay over 20 years!

Well, there may be argument of why B cannot refinance his loan with lower spread?
I can bet that B will never ever be able to get spread of 1% or less any more when SIBOR is >>1%.

I will also bet that SIBOR will not cross 2% within 3 years, thus 3 years fixed rate has negligible benefits over a long term loan.

Having said that, 3 years fixed rate is good for people who intend pay down their loan quickly within 5 years or so.

Yes.
I agree to some of you saying that back then when you took up 0.75% spread Yu all are still not affected much even if SIBOR is at 1%
but have you all take into account of the comparison?
If you're using 1.75% against the current benchmark of 1.88% Fixed 3 years.
If SIBOR hit with 1.5%, easily you pay much more already.
In additon to those who procrastinate earlier when rates were still low at 3 years fixed 1.25,1.45,1.55 offered by banks, you've already saved much more and more than enough to cover your 'admin fees'
3 years fixed 1.25,1.45,1.55 compared to market rate of about 2% by end of this year, and a conservative 2.5% for the next 2 years, you'll save more than 10k for a loan more than 500k with 20 years to go at least for the next 3 years.

It does not mean that holding on a low spread despite SIBOR being high won't affect you much.
If the only way is up now, It affects deeply, and true enough, for the next 2 years will definitely be up.

[MortgageGuru]

There is always 2-sides of a coin.......

E.g., A takes up SIBOR + 0.75% spread fixed. Pay loans for 20 years.

B takes up fixed 1.25, 1.45, 1.55% for 3 years, then end up have to pay SIBOR + 1.25% spread, pay loans for 20 years.

Who will be better off?
I believe A is better off than B in such scenario...........
Imagine difference in spread between A and B is 0.5%, that is a lot to pay over 20 years!

Well, there may be argument of why B cannot refinance his loan with lower spread?
I can bet that B will never ever be able to get spread of 1% or less any more when SIBOR is >>1%.

I will also bet that SIBOR will not cross 2% within 3 years, thus 3 years fixed rate has negligible benefits over a long term loan.

Having said that, 3 years fixed rate is good for people who intend pay down their loan quickly within 5 years or so.

It depends, based on current market if rates were to increase further up, fixed definitely solve the short term issue first.
subsequently you can always search for the low fixed rate.
Low spread can be good but if SIBOR indeed raise higher and higher to 1.5%,2%,2.5%
eventually you'll still refinance isn't it?

[MortgageGuru]

It depends, based on current market if rates were to increase further up, fixed definitely solve the short term issue first.
subsequently you can always search for the low fixed rate.
Low spread can be good but if SIBOR indeed raise higher and higher to 1.5%,2%,2.5%
eventually you'll still refinance isn't it?

We don't bet on rates, we should never bet on it, we have to factor in alot of considerations as well.
Supply vs demand is one main concern to how the rates will be.
employment rate as well and many more.
forecast the rate, not bet.

[darkseed73]

Yes.
I agree to some of you saying that back then when you took up 0.75% spread Yu all are still not affected much even if SIBOR is at 1%
but have you all take into account of the comparison?
If you're using 1.75% against the current benchmark of 1.88% Fixed 3 years.
If SIBOR hit with 1.5%, easily you pay much more already.
In additon to those who procrastinate earlier when rates were still low at 3 years fixed 1.25,1.45,1.55 offered by banks, you've already saved much more and more than enough to cover your 'admin fees'
3 years fixed 1.25,1.45,1.55 compared to market rate of about 2% by end of this year, and a conservative 2.5% for the next 2 years, you'll save more than 10k for a loan more than 500k with 20 years to go at least for the next 3 years.

It does not mean that holding on a low spread despite SIBOR being high won't affect you much.
If the only way is up now, It affects deeply, and true enough, for the next 2 years will definitely be up.

Hmm my loan only 400k and i intend to reduce it to 200k by 2018. Does that meant I will be ok to stick with my 0.75 + Sibor?

[mummy]

Hmm my loan only 400k and i intend to reduce it to 200k by 2018. Does that meant I will be ok to stick with my 0.75 + Sibor?

My loan also around there at $380k and also at 0.75 + SIBOR but meeting my Maybank banker tonight to get fixed 1.5% and 1.55% for 2 years as afraid interest will keep shooting up.

[henryhk]

After two years, wat will be the new rates?

[vboy]

Rising Singapore interest rates sting mortgage borrowers with Sibor up at fastest pace in a decade
PUBLISHED ON MAR 3, 2015 2:14 PM 0 10 0 0
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SINGAPORE — The era of ultra-easy money is drawing to an end for Singapore mortgage holders, with domestic interest rates rising at their fastest pace in a decade in a country that already ranks among the world's most expensive places to live.

The three-month Singapore interbank offered rate (Sibor), used to set floating-rate mortgages, climbed to 0.78756 per cent today (March 3). It has gained 33 basis points so far this year, exceeding all the annual increases since 2005.

Analysts expect the rate to end 2015 at around 1.0 per cent. The surge has been fuelled by the Singapore dollar's weakness against the greenback. A softer Singapore dollar can put upward pressure on local interest rates as investors seek higher yields as compensation for holding a weakening currency.

Exacerbating the Singapore dollar's fall and boosting Sibor, the central bank in late January allowed the currency to appreciate at a slower pace. Most economists polled by Reuters expect the Monetary Authority of Singapore to further ease policy next month. Analysts say three-month Sibor may stabilise as the Singapore dollar adjusts to the policy shifts.

Mortgage borrowers will probably feel more impact from the rising Sibor in the second half of 2015, as interest rates on mortgages tend to be set every three months, said Michael Wan, an economist at Credit Suisse.

Singapore's real estate has already been stung by government measures aimed at cooling the market, particularly in the high-end private-homes segment. Higher mortgage rates will dampen the broader home market dominated by government-built housing now in the private sector and owned by ordinary Singaporeans.

The impact on discretionary spending by households will likely be more evident in the second half, Mr Wan said.

The outstanding amount of household mortgages rose nearly 37 per cent to S$216.7 billion at the end of 2014 from 2010 in a period of near zero interest rates. A typical floating-rate loan for a government-built flat is worth about S$300,000 with a tenure of around 25 years. If the loan was taken at the start of 2014, the interest rate would have hovered near 1.3 per cent through the year, with three-month Sibor roughly around 0.4 per cent.

The monthly loan repayment, consisting of principal and interest repayments, would have been about S$1,170. Assuming the mortgage rate is now re-set to 1.68 per cent based on current Sibor levels, the repayment would increase by roughly S$50, said Wayne Quek, a Singapore-based mortgage consultant. REUTERS