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Thread: 3 Year Fixed Rate Loan

  1. #1
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    Default 3 Year Fixed Rate Loan

    What's the best 3 year fixed rate loan you've heard off in recent weeks?

  2. #2
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    If the DBS Promo 3 year fixed rate package is still available, that should be it..

    1st year - 1.99%
    2nd year - 2.19%
    3rd year - 2.29%

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    OCBC is having a 2 Year variable rate of 1.68%/1.68%/1.68%.

    Risky or not? Anyone heard any reviews on this?

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    Quote Originally Posted by beachball8
    OCBC is having a 2 Year variable rate of 1.68%/1.68%/1.68%.

    Risky or not? Anyone heard any reviews on this?
    ok this is purely personal opinion

    i never ever take a fixed rate housing loan ..

    i have always taken floating rate ..

    is rate going to fly ?? not likely ...even if it is .. then just refinance or ask for repricing .. you can always find another bank willing to lend at slightly better than another, just to clinch the deal ..

    and even if rates go up .. after refinancing , its still lower than fixed rate ..

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    Quote Originally Posted by proud owner
    ok this is purely personal opinion

    i never ever take a fixed rate housing loan ..

    i have always taken floating rate ..

    is rate going to fly ?? not likely ...even if it is .. then just refinance or ask for repricing .. you can always find another bank willing to lend at slightly better than another, just to clinch the deal ..

    and even if rates go up .. after refinancing , its still lower than fixed rate ..
    in this kind of economic climate, I tend to agree with u that it's better to take floating rate which is likely to remain flattish for at least the next 1-2 years....I took the SOR-based floating rate pkg which doesn't come with any lock-in period. I can ask the bank to reprice or refinance with another bank any time the rates get too high....

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    KarenK.... which bank?

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    Quote Originally Posted by beachball8
    OCBC is having a 2 Year variable rate of 1.68%/1.68%/1.68%.

    Risky or not? Anyone heard any reviews on this?
    Anyone got any opinion on this loan?

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    3y fixed ok what, if it's really low fixed like the old DBS package 1.99% for 3yrs. The current one not so attractive already.

    the OCBC 1.68% one is not "fixed" lah. It's from the infamous "board rate". Never heard horror story of "board rate" meh ? Run as fast as you can from it! "board rate" is a totally arbitrary number that is totally at the control of the bank , which can be totally changed any time and at any direction, without even the slightest correlation to the actual funding rate market. Example, Sibor can be treading downwards, but "board rate" can increase 300% overnite. Reason : " other costs". A few yrs back ppl all have no choice. Now thanks to DBS doing national service started the Sibor package, we consumers finally have a fair loan rate system!

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    Quote Originally Posted by beachball8
    KarenK.... which bank?
    mine was a while back......at that time all the local banks (UOB, OCBC, DBS) were offering it and I think Citibank & HSBC too.......

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    Quote Originally Posted by amk
    3y fixed ok what, if it's really low fixed like the old DBS package 1.99% for 3yrs. The current one not so attractive already.

    the OCBC 1.68% one is not "fixed" lah. It's from the infamous "board rate". Never heard horror story of "board rate" meh ? Run as fast as you can from it! "board rate" is a totally arbitrary number that is totally at the control of the bank , which can be totally changed any time and at any direction, without even the slightest correlation to the actual funding rate market. Example, Sibor can be treading downwards, but "board rate" can increase 300% overnite. Reason : " other costs". A few yrs back ppl all have no choice. Now thanks to DBS doing national service started the Sibor package, we consumers finally have a fair loan rate system!
    board rate out of fashion liao lah......the "in" thing nowadays is the SOR-based pkg.....
    (SOR = SIBOR + bank costs)

  11. #11
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    Quote Originally Posted by KarenK
    (SOR = SIBOR + bank costs)
    strictly speaking this is not how SOR is computed. The strict definition of SOR is "the cost of borrowing SGD synthetically by borrowing USD for the same tenor and swapping out the USD in return for the SGD". Practically speaking SOR is more or less implied from the USD/SGD forward prices. "bank costs" is not part of it. Rather, the parts affecting SOR is USD rates and USD/SGD fx sensitivities. SOR is an open fixing just like Sibor, but is not related to Sibor. Only UOB/OCBC is using SOR as reference. All other banks use Sibor, with Stanchart has an option for SOR. The biggest problem of SOR is that it's much much more volatile than Sibor.

    (btw, Sibor is "SGD interbank offer rate", that's truely a simple SGD loan rate that a bank offer to charge each other, so it's the minimum fair rate)

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    Quote Originally Posted by amk
    strictly speaking this is not how SOR is computed. The strict definition of SOR is "the cost of borrowing SGD synthetically by borrowing USD for the same tenor and swapping out the USD in return for the SGD". Practically speaking SOR is more or less implied from the USD/SGD forward prices. "bank costs" is not part of it. Rather, the parts affecting SOR is USD rates and USD/SGD fx sensitivities. SOR is an open fixing just like Sibor, but is not related to Sibor. Only UOB/OCBC is using SOR as reference. All other banks use Sibor, with Stanchart has an option for SOR. The biggest problem of SOR is that it's much much more volatile than Sibor.

    (btw, Sibor is "SGD interbank offer rate", that's truely a simple SGD loan rate that a bank offer to charge each other, so it's the minimum fair rate)
    Your statement about SOR is more volatile than SIBOR is untrue.

    If the purchase is for investment not for own stay, usually people don't care it is volatile or not. Investor just look for somethings that is FAIR!

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    Quote Originally Posted by isaaclim
    Your statement about SOR is more volatile than SIBOR is untrue.
    u kidding, r u ? SOR is so tied up with fx it's volatile by definition.

    If the purchase is for investment not for own stay, usually people don't care it is volatile or not. Investor just look for somethings that is FAIR!
    what does this has ANYTHING to do with SOR more volatile than Sibor ?

    (or u dun really get what I was talking about ... do u know how Sibor fixing works ? Do u know how swap offer rate works ? This has nothing to do with mortgage loan u know )

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    Quote Originally Posted by amk
    strictly speaking this is not how SOR is computed. The strict definition of SOR is "the cost of borrowing SGD synthetically by borrowing USD for the same tenor and swapping out the USD in return for the SGD". Practically speaking SOR is more or less implied from the USD/SGD forward prices. "bank costs" is not part of it. Rather, the parts affecting SOR is USD rates and USD/SGD fx sensitivities. SOR is an open fixing just like Sibor, but is not related to Sibor. Only UOB/OCBC is using SOR as reference. All other banks use Sibor, with Stanchart has an option for SOR. The biggest problem of SOR is that it's much much more volatile than Sibor.

    (btw, Sibor is "SGD interbank offer rate", that's truely a simple SGD loan rate that a bank offer to charge each other, so it's the minimum fair rate)

    http://www.myhousingloan.com.sg/hous...ossary.php#sor

    Singapore Interbank Offered Rate (SIBOR)

    Singapore Interbank Offered Rate is fixed by the Association of Banks in Singapore. It represents the rate that banks and financial institutions lend unsecured funds to each other in Singapore. Local housing loan interest rates track movements in the Sibor.



    Singapore Swap Offer Rate (SOR)

    Swap offer rate is fixed by the Association of Banks in Singapore. It represents the average cost of funds used by banks in Singapore for commercial lending.


    http://www.standardchartered.com.sg/...ssary_sub.html

    Singapore Interbank Offer Rate (SIBOR)
    Singapore Interbank Offer Rate (SIBOR) refers to the rate that financial institutions in Singapore lend / borrow unsecured funds to / from each other. Your loan can be based on the 3-month or 12-month SIBOR. If your loan is based on the 3-month SIBOR, your interest rate will be 3-month SIBOR plus a margin for the Bank and repriced every 3 months. This rate is transparent and published daily in The Business Times.

    Swap Offer Rate (SOR)
    Swap Offer Rate (SOR) is SIBOR plus lending costs incurred by the banks. It is as transparent as SIBOR that reflects market conditions. If your loan is based on the 3-month SOR, your interest rate will be 3-month SOR plus a margin for the Bank and repriced every 3 months. This rate is transparent and published daily in The Business Times.

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    KarenK, no offense, but that website is for laymen to have a rough idea what these rates are. In financial market the definition and implication of these rates are common sense.

    Just to illustrate, your quote says :

    Swap Offer Rate (SOR)
    Swap Offer Rate (SOR) is SIBOR plus lending costs incurred by the banks.
    this is decisively incorrect. This is the simplified language where banks explain to you. In financial market, it is the one that I posted above. by and large an implied rate from USD/SGD forward. As "swap offer rate" involves borrowing in USD and settles in USDSGD forward, it's very complex to explain to a customer what a "swap rate" and "forward" operates. So those rookie bankers simply tell you that.

    For example, yesterday's SOR 3M fixing was 0.5606, Sibor 3M was 0.68458. SOR is lower than Sibor. If your quote is correct, that would mean bank's "cost" is negative. That's just simply not possible. The reason SOR is low is mostly due to USD/SGD fx forward going down plus USD rates are low.

    Btw, to illustrate volatility, SiborSGD3M changes 6 times in the entire month of August, SOR 3M changes almost every day!

  16. #16
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    Quote Originally Posted by amk
    KarenK, no offense, but that website is for laymen to have a rough idea what these rates are. In financial market the definition and implication of these rates are common sense.

    Just to illustrate, your quote says :


    this is decisively incorrect. This is the simplified language where banks explain to you. In financial market, it is the one that I posted above. by and large an implied rate from USD/SGD forward. As "swap offer rate" involves borrowing in USD and settles in USDSGD forward, it's very complex to explain to a customer what a "swap rate" and "forward" operates. So those rookie bankers simply tell you that.

    For example, yesterday's SOR 3M fixing was 0.5606, Sibor 3M was 0.68458. SOR is lower than Sibor. If your quote is correct, that would mean bank's "cost" is negative. That's just simply not possible. The reason SOR is low is mostly due to USD/SGD fx forward going down plus USD rates are low.

    Btw, to illustrate volatility, SiborSGD3M changes 6 times in the entire month of August, SOR 3M changes almost every day!

    we are all laymen here unlike u. your explanation is too complicated for simple laymen like us. these definitions are what I uplifted from those websites I indicated. it's good enough for simple folks like us. anyway no hard feelings and thanks for your detailed explanation which is hard to find anywhere on the net.

  17. #17
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    Quote Originally Posted by amk
    KarenK, no offense, but that website is for laymen to have a rough idea what these rates are. In financial market the definition and implication of these rates are common sense.

    Just to illustrate, your quote says :


    this is decisively incorrect. This is the simplified language where banks explain to you. In financial market, it is the one that I posted above. by and large an implied rate from USD/SGD forward. As "swap offer rate" involves borrowing in USD and settles in USDSGD forward, it's very complex to explain to a customer what a "swap rate" and "forward" operates. So those rookie bankers simply tell you that.

    For example, yesterday's SOR 3M fixing was 0.5606, Sibor 3M was 0.68458. SOR is lower than Sibor. If your quote is correct, that would mean bank's "cost" is negative. That's just simply not possible. The reason SOR is low is mostly due to USD/SGD fx forward going down plus USD rates are low.

    Btw, to illustrate volatility, SiborSGD3M changes 6 times in the entire month of August, SOR 3M changes almost every day!
    Good explanation. Now at least I know that the bank swap S$ against US$ to derive SOR for lower rates. Another currency risk will be US$ vs S$


    So Swap is a financial term , in layman's term , it meant exchange from one to another.

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    so with SGD being slowing appreciating against USD, maybe so does it means cost of borrow of swapping SGD from USD is higher cost thus SOR rate will be higher?

    however, FX rate is another subject altogether.

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    In this current market, I would go for Fixed Rates as my first choice, SIBOR as my second, SOR as my last.

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    Quote Originally Posted by penguin
    In this current market, I would go for Fixed Rates as my first choice, SIBOR as my second, SOR as my last.

    why ?

    i

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    Quote Originally Posted by penguin
    In this current market, I would go for Fixed Rates as my first choice, SIBOR as my second, SOR as my last.

    why ?

    i would just go for SIBOR (floating) + bank margin ...
    all banks will have same SIBOR ...difference will be the margin ..at least i am not restricted by l;ock in period .. and can reduce amt any time ..


    SOR ..also same for all banks .. margin differs .. but SOR has an fx risk and hence can be volatile ..

    Fixed is 'dead'' .. cant change , tomorrow you strike TOTO you still cannot use your winning to reduce the loan .. without a heft penalty ..

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    Quote Originally Posted by proud owner
    why ?

    i would just go for SIBOR (floating) + bank margin ...
    all banks will have same SIBOR ...difference will be the margin ..at least i am not restricted by l;ock in period .. and can reduce amt any time ..


    SOR ..also same for all banks .. margin differs .. but SOR has an fx risk and hence can be volatile ..

    Fixed is 'dead'' .. cant change , tomorrow you strike TOTO you still cannot use your winning to reduce the loan .. without a heft penalty ..
    Actually Fixed package can be flexible too. Like the recent 1.99% Fixed from DBS, which allows partial redemption anytime during lock-in. Even full redemption is also allowed as long as it is for sale of property.

  23. #23
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    We''ve gone off topic!!

    I started this thread to ask for recommendations on 3 year fixed rate loans. Can we get back on track please...

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    The DBS 1.9% one that some have mentioned is one of the best. But I suspect it may no longer be available. The rates for the fixed packages have moved up.

    Probably the banks are prepping should the borrowing costs escalate in the immediate to mid term.

    You should call the banks.

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    Quote Originally Posted by beachball8
    We''ve gone off topic!!

    I started this thread to ask for recommendations on 3 year fixed rate loans. Can we get back on track please...
    this is called offering u more options in case u don't know it's a whole wide world out there....

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    I got the dbs 1.99% 3 year fixed rates with no partial payment penalty and no lock-in period. I think this has served almost all my needs.
    The reason why I don't like to go for SOR is cos my old property was financed with UOB's SOR package and during 2007 my interest escalated to 5+%!! And too bad I was still in locked-in period thus could only refinance later.
    I also talked to a few bankers and my opinion is that SOR fluctuates much more than Sibor and the probability of SOR rising more than Sibor is also much higher.

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    Quote Originally Posted by echotrain
    The DBS 1.9% one that some have mentioned is one of the best. But I suspect it may no longer be available. The rates for the fixed packages have moved up.

    Probably the banks are prepping should the borrowing costs escalate in the immediate to mid term.

    You should call the banks.
    agree. DBS1.99% 3 years fixed is best, allows partial repayment which is quite generous for a fixed rate package. It is available again. I'm reminded by my loan consultant that this package requires buying mortgage insurance from DBS only. Only for completed project.

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    Quote Originally Posted by housewife
    agree. DBS1.99% 3 years fixed is best, allows partial repayment which is quite generous for a fixed rate package. It is available again. I'm reminded by my loan consultant that this package requires buying mortgage insurance from DBS only. Only for completed project.
    Yes but you do not have to take 100% mortgage insurance coverage to enjoy this rate. I believe the minimum is around 150K? which is the min. required for mortgage insurance by the insurance company...

  29. #29
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    Quote Originally Posted by gwlip
    Yes but you do not have to take 100% mortgage insurance coverage to enjoy this rate. I believe the minimum is around 150K? which is the min. required for mortgage insurance by the insurance company...
    I see. thanx. btw, is mortgage insurance compulsory? for HDB or condo

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    Quote Originally Posted by housewife
    I see. thanx. btw, is mortgage insurance compulsory? for HDB or condo
    Mortgage Reducing Insurance is not compulsory to take if that's what you are asking. But to enjoy the current DBS promo package at 1.99 each 1st 3 years, need to take it. Otherwise as I know it will be at 1.99 2.19 and 2.29%.

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