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Thread: Want home loan rate adjusted? Pay $6,000 fee

  1. #1
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    Default Want home loan rate adjusted? Pay $6,000 fee

    http://www.straitstimes.com/ST%2BFor...ry_237751.html

    May 16, 2008

    Want home loan rate adjusted? Pay $6,000 fee


    WHEN I signed up a home loan with Maybank one year ago when Sibor was still at 2.4 per cent, with a view that general interest rates will go down, I decided to take the risk with a floating rate loan pegged at 0.97 per cent below Maybank board rate (3.75 per cent) for the first year.

    This was despite the reminder by the loan officer that should interest rates go up, Maybank will correspondingly increase its board rate. While not pegged directly to Sibor, I was told that Sibor will be a good benchmark.

    Now, one year down the road when Sibor has dropped almost one per cent to 1.44 per cent, I am still waiting for my floating loan to be adjusted accordingly.

    I was told that my loan will be adjusted only if I pay a repricing fee of $6,000. This makes the readjustment completely unviable. What's more, Maybank has been offering new packages at 2.28 per cent for the first year all this while.

    Can the bank explain?

    Chong Chiat Wah

  2. #2
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    Default Re: Want home loan rate adjusted? Pay $6,000 fee

    Quote Originally Posted by mr funny
    http://www.straitstimes.com/ST%2BFor...ry_237751.html

    May 16, 2008

    Want home loan rate adjusted? Pay $6,000 fee


    WHEN I signed up a home loan with Maybank one year ago when Sibor was still at 2.4 per cent, with a view that general interest rates will go down, I decided to take the risk with a floating rate loan pegged at 0.97 per cent below Maybank board rate (3.75 per cent) for the first year.

    This was despite the reminder by the loan officer that should interest rates go up, Maybank will correspondingly increase its board rate. While not pegged directly to Sibor, I was told that Sibor will be a good benchmark.

    Now, one year down the road when Sibor has dropped almost one per cent to 1.44 per cent, I am still waiting for my floating loan to be adjusted accordingly.

    I was told that my loan will be adjusted only if I pay a repricing fee of $6,000. This makes the readjustment completely unviable. What's more, Maybank has been offering new packages at 2.28 per cent for the first year all this while.

    Can the bank explain?

    Chong Chiat Wah

    DBS now pegs their housing loan on the 12-month Sibor and I had just repriced my loan at Sibor + 0.75 and the quoted Sibor rate is 1.625% which make my new rate 2.375% (existing one is 4.5%).

    DBS's repricing fee has always been $500, not the exorbitant $6,000.00.

    Your case may not be just the repricing fee, but may include a penalty because you had just repriced your mortgage a year ago. There is normally a waiting period of 1, 2 or 3 years depending on each bank's policy.

    Depending on the integrity of the bank, when a loan is repriced, it could simply be an administrative issue by changing the numbers and so the repricing fee is a nominal $500. But if the bank uses a "two-step" manouevre, i.e. treat it as a full payment of the existing loan by a new loan, then they charge a penalty, effectively treating the repricing exercise as a redemption plus new loan package (borrowers are expected to be grateful because they save legal fees, etc.)

    This same trick is used by credit card companies. Instead of converting your Japanese Yen into SGD directly, some would do a double conversion in the two-step manoeuvre by first converting from Yen to USD, then from USD to SGD, in the process they squeezed out more spread in the double conversion.

    Until the recent change to greater transparency, banks do not use the Sibor rate, but set their own "Board" rate or some other fanciful name which is essentially, "their mercy rate".

    The banking industry is an oligopoly with monopoly bully power!

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    Default Re: Want home loan rate adjusted? Pay $6,000 fee

    What to do? The banks has all our money (pay us less than 1% interest), but lend us our money at 2% and above. They are using our money to make money for themselves. Aren't we

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    Default Re: Want home loan rate adjusted? Pay $6,000 fee

    Quote Originally Posted by hans
    What to do? The banks has all our money (pay us less than 1% interest), but lend us our money at 2% and above. They are using our money to make money for themselves. Aren't we
    I have no qualms for anyone, banks, corporations, hawkers, etc., of making money otherwise how can there be businesses, but they must not be crooked, if they cannot be absolutely honest.

    Especially for banks which have all the financial muscles and a necessary evil in the modern civilisation (post barter era).

    There is one other area banks are absolutely dishonest -- and it involves those with strata title properties such as condominiums.

    Under the law, condo management or the management corporations (MCSTs) are required to insure the entire estate for fire and other perils, which would include the unit you owned.

    However, if you have a loan with a bank, it would force you to take up an additional policy covering your unit above and over the estate's policy and at exorbitantly high premium.

    For example, the rate for the MCST is $0.06 per $1,000 sum insured, but for a condo apartment with the sum assured of $300,000, the premium was as high as $180.00, or $0.60 per $1,000, some ten times or 1,000% higher.

    That is still not too bad if there is any value. What really happens is that if, unfortunately, your unit was destroyed by fire, the bank can call the insurance to pay up the $300,000 under the policy, but the restoration of the unit is done by the MCST under the estate's policy.

    And here is the crooked part: that you DO NOT REDUCE your financial liability after your policy has paid out, instead, the $300,000 mortgage is reduced on the bank's account BUT, and a titantic BUT, you are now required to pay to the insurance company the $300,000 paid out under the insurance policy. It is merely a transferring of creditor from bank to insurance company.

    In other words, the premiums you paid simply go into some peoples' pockets with no benefit to you at all; instead of paying the bank your loan, you now pay the insurance company, after the fire.

    Why do the banks do this? In many cases, the insurance companies are subsidiaries of the banks, in others, they get a commission or kick back of the premiums!

    The issue was brought into the open sometime in 2003 or 2004 and CASE agreed that the second insurance was not necessary, but the banks simply pretended they heard nothing and continued to rip our pockets, with the government adopting the see nothing, hear nothing and speak nothing policy.

    The annual ripped off is estimated at $25.0m. in 2003, probably much more now as property prices have risen.

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