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Thread: When will interest rate goes up?

  1. #1
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    Default When will interest rate goes up?

    So many people buy property thinking that the interest rate is low. Like what some discussions here, INTEREST is the real killer. Any thoughts? Which bank provide the best package? So far, it seems that OCBC and Standard Chartered has very competitive mortgage loan. Same old discussions - SOR vs SIBOR.

  2. #2
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    DBS is offering sibor +0.5% and +0.75% for first 2 years with lock-in.

    What are the rates for OCBC, UOB and StanChart - better than DBS?

  3. #3
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    Quote Originally Posted by greenhorn
    DBS is offering sibor +0.5% and +0.75% for first 2 years with lock-in.

    What are the rates for OCBC, UOB and StanChart - better than DBS?
    DBS, StanChart and HSBC are based on SIBOR, whereas OCBC and UOB are based on SOR.

    DBS has the best rates because their cost of funds is lowest due to the huge POSB savings base.

    Quote Originally Posted by ipspassion
    So many people buy property thinking that the interest rate is low. Like what some discussions here, INTEREST is the real killer.
    INTEREST is not the killer. I have said many times before that when interest rates are high, that's a good time to buy properties.

    Some members here don't like me to keep repeating the same things again and again, but then there are people here who keep trying to talk down the market again and again, hence I have no choice but to keep correcting them again and again.

    The strange thing is that people who try to talk down the market again and again by repeating the same things again and again have absolutely no basis for the nonsense that they keep repeating, other than hearing from this discussion here or that heresay there, if not then it is some opinion plucked out from thin air.

    On the other hand, when I make a pronouncement, I am backed up with real data.

    I shall keep it short.

    Look at the two newclips below, and form your own conclusion.




  4. #4
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    Since there are so many people in this forum spreading misinformation about the effect of interest rates on property prices, I feel that it is my onus to right the wrongs once and for all.

    Below is a chart of the most comprehensive data comprising US Federal Funds rate from 1954 to 2009 (in red); superimposed onto Singapore's Property Price Index from 1960 to 2010 (in green).

    (Due to Singapore's monetary policy, our interest rates closely track US interest rates, as seen from my news clippings above).

    As many forum members here have completed my course on the Propertism School Leaving Exam (PSLE), it's time we progress to a higher level coursework in the University of Propertism's Bachelor of Propertism (B.P.)

    Looking at the following chart, it can be seen that whether interest rates go up or down, anytime is a good time to buy properties!



    Let's analyse the chart in stages:

    i) From 1960 to 1990, Singapore' property price index rosed from 8 points to 42 points (525%) despite extremely high interest rates environments of up to 19% p.a. (which you can also see from my news clippings in my other posts which I shall not reproduce here again in case I am subjected to even more vitriol). [Interest Up; Property Up]

    ii) From 1990 to 1997, interest rates plunged from 10% to 3% and then held steady at around 5%. This period saw Singapore's property price index made its most remarkable ascend from 42 points to its all time high of 180 points (429%). [Interest Down; Property Up]

    iii) From 1997 to 2004, interest rates were in a general downtrend (due to Alan Greenspan's lose monetary policy) but Singapore's property market fell due to the Asian Financial Crisis and Dot Com Bust. [Interest Down; Property Down]

    iv) From 2004 to 2007, the Fed tightened monetary policy causing interest rates to shoot up from 1% to 5%, and Singapore's property price index shot up from its post-SARS doldrums to almost touching the all-time high of 180 points again. [Interest Up; Property Up]

    v) From 2007 to early-2009, the sub-prime hit and Lehman Brothers collapsed. The Fed cut interest rates to almost zero, but Singapore's property market plunged. [Interest Down; Property Down]

    vi) From mid-2009 to 2010, interest rates remained around zero, but Singapore's property market shot up again. [Interest Zero; Property Up]

    Tell me. What correlation do you see between interest rates and property prices?

    Can you see Michael Jackson's face in the tree stump below?

  5. #5
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    The simple conclusion that I draw from the chart is, again, what have been repeated ad nauseum by all media and government, that property prices will eventually go up over the long term regardless of economic and financial state.

    This may not apply to many short term investors here. It's akin to buying govt bonds/stocks vs short term forex microtrading. Some may not have holding power for decades.

    However, for those who are in it for the long run, you can almost think of it as guarantee sure-win!

  6. #6
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    I have to first qualify that I am not pro-garment.

    A strong and stable garment with a vision but without inconsistent policy are important ingredients for steady growth.

  7. #7
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    Yah, those who bought during the 97 high can only start to breakeven now. ( Some almost did break even in 08 but ruined by the financial crisis). This is a 13 years wait for profit taking. Many did not wait that long and sold at a loss long time ago.

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    Quote Originally Posted by greenhorn
    DBS is offering sibor +0.5% and +0.75% for first 2 years with lock-in.

    What are the rates for OCBC, UOB and StanChart - better than DBS?
    How about 3rd year onwards for DBS? Time to shop with DBS to check out. OCBC in this case is comparable as SOR is lower.

    OCBC 1 year lock-in: yr1 SOR + 0.8%, yr2 SOR + 0.8%, yr 3 onwards SOR + 1.25%
    OCBC 2 years lock-in: yr1 SOR + 0.5%, yr2 SOR + 0.75%, yr 3 onwards SOR + 1.25%

    StandChart and Maybank is higher.

    Have not asked for quotation from UOB yet.

  9. #9
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    Hi jlrx, you seems to have a PHD on propertism. Interesting to see your analysis. Thanks.

  10. #10
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    I guess the main thing is to buy within your means and have enough reserves in case of another crisis, you will not be forced to do fire sales.

  11. #11
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    Quote Originally Posted by ipspassion
    How about 3rd year onwards for DBS? Time to shop with DBS to check out. OCBC in this case is comparable as SOR is lower.

    OCBC 1 year lock-in: yr1 SOR + 0.8%, yr2 SOR + 0.8%, yr 3 onwards SOR + 1.25%
    OCBC 2 years lock-in: yr1 SOR + 0.5%, yr2 SOR + 0.75%, yr 3 onwards SOR + 1.25%

    StandChart and Maybank is higher.

    Have not asked for quotation from UOB yet.
    I thought Standard is rather competitive in the first year with one-year lock in:
    1st yr 1.25% fixed
    2nd Year 0.98 + 3 mths sibor
    3rd Year 1.25 + 3 mths sibor

  12. #12
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    jlrx,

    Let me toast you a Royal salute

  13. #13
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    In 1958, CK Tang bought a 1,351-square metre piece of land at the corner of Orchard Road and Scotts Road at a cost of S$10,000 to further his vision of expanding his business. Although the site faced the Tai San Ting Cemetery, he felt that it had commercial value as many British housewives in the Tanglin area could stop by on their way to the city. The decision was made against the advice of fellow businessmen who thought Orchard Road was unfashionable then. Years later, when the Singapore Government designated and developed Orchard Road as a prime shopping and tourist district, the price of land soared from S$3 per m to S$6,000 per m.

  14. #14
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    Quote Originally Posted by Property_Owner
    jlrx,

    Let me toast you a Royal salute
    Thank you very much!



    Quote Originally Posted by ipspassion
    Hi jlrx, you seems to have a PHD on propertism. Interesting to see your analysis. Thanks.
    Here is my name card ...


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