SIBOR OR SOR?

[mcmlxxvi]

Slaughtered in the 2nd yr? Nah...still enjoying gd rates for 1st and 2nd yr with lock-in. At least I can sleep well without worrying if a spike in SIBOR / SOR will cause me an arm or leg to service loan for any particular month. The time frame for Board Rate to react to sharp spikes in SIBOR / SOR is much longer, maybe a few months. By tat time, I oredi out of lock-in period.

Ask anyone in the streets - SIBOR / SOR is foreseen to go up than down. If you are stucked with a lock in with SIBOR - gd luck!

Anyway, I rest my case. No need to explain more since I do not get commission for selling DBS Prime Rate packages. Just get what you like. At the end of the day, don't regret and cry father cry mother!

Analysts have positioned the low interest rate market phenomenon to last for another year at least until 2011.

[mcmlxxvi]

Common operandi - Quote you special rates (special big discounts) in 1st year, then you get locked in 2 years and you get slaughtered in 2nd year. DBS didn't change board rate since 2002? By the way, SIBOR is lowest in 2003 and now, means DBS never lower their rate to match real market rate?

Banks say they never change 'board rate' but they can always change the '+' part. Eg. 'board rate + x%' the x they can change it anytime.

[kurby]

There is no point arguing which is the best rate to use because different people have different risk appetite and also different objectives...some look for lowest costs, some look for stability..etc

Usually Board rate are more stable, bank dun change their board rate all the time, so borrowers know their monthly payment. But the catch is there is no guarantee that the bank will not increase their board rate when their cost of funds rises...and at the same time, when their cost of funds drop, board rate will not drop to match it....

At this point in time, packages that are pegged to Sibor or SOR are giving better packages than Board rate......but when Sibor or SOR raises...who knows, Board rate could be better....

Anyway there were enough people being screwed by board rate previously...that's why they introduce the Sibor or SOR pegged packages...

[amk]

blue u really didn't get it : the main reason why your board rate didn't change is simply because market rate is falling. there is no need to adjust board rate down. You are already losing money. The moment the market rate moves up, your board rate moves up even faster and bigger ! (e.g. board rate can move up by a full 1% at one time, do u know that ? sibor/sor goes by bps.)

there are enough past evidence to show u that. can ask jlrx to find the old newspaper forum complaints. (I myself already experienced twice. At that time I had no choice)

and fundamentally, thinking using "board rate" to shield against interest rate movement is just so wrong, I dun even know how to start to explain to you.

I'm not here to convince you since u already made up your mind. Good for you. The discussion between SOR or SIBOR is academic, between board rate is not. Frankly I was so shocked to see your 1st post, I almost thought you are a loan salesman in disguise. But since you are not, you are really a believer. Nothing will change your mind until you are hit by it. So let's just hope for the best for you.

btw take note abt ur "free conversion" clause. In most cases, the packages you can convert to are not the prevailing promotional packages of the bank at that time. It's the "packages applicable to you". Dun be too hopeful abt that. Most ppl refinance after 3ys. So the bank price the loan packages with a simple 3y horizon. Rate after that , "is academic".

[teddybear]

What is the rate you are getting this year and next year?

Slaughtered in the 2nd yr? Nah...still enjoying gd rates for 1st and 2nd yr with lock-in. At least I can sleep well without worrying if a spike in SIBOR / SOR will cause me an arm or leg to service loan for any particular month. The time frame for Board Rate to react to sharp spikes in SIBOR / SOR is much longer, maybe a few months. By tat time, I oredi out of lock-in period.

Ask anyone in the streets - SIBOR / SOR is foreseen to go up than down. If you are stucked with a lock in with SIBOR - gd luck!

Anyway, I rest my case. No need to explain more since I do not get commission for selling DBS Prime Rate packages. Just get what you like. At the end of the day, don't regret and cry father cry mother!

[Blue]

What is the rate you are getting this year and next year?

Sorry, I am not supposed to disclose the rates because it is negotiated. But definately, it is only an inch higher than those 1 month SOR + x % (with lock-in) offered by other banks, and few inches lower than fixed rate (with lock-in) offered by other banks.

The rates are also comparable to those 3 mth SOR / SIBOR + x% less the volatility.

Anyway, it is just 2 years lock-in, so I am betting that DBS prime rate will not change for the next 2 years (given they have not changed since 2003 - it's published in their website newsroom for any change - thereby the transparency). Am prepared to refinance on the 3rd year when other packages are more attractive.

At least for DBS prime rate, I am more confident they are relatively fixed due to history. For other banks' board rates - take it with a pinch of salt...need to do your research.

My advice to anyone taking up bank loan is:

1) If you foresee market interest rates to trend up - go for fixed or relatively fixed

2) If you foresee market interest rates to remain low or trend down - go for variable

As mentioned previously, no one in the world can tell you how market interest rates will perform for the next 2 yrs because a lot of economic factors are involved. Given that market interest rates are at historical lows now, the only way for it to move is up!!!

SOR in general fluctuates more than SIBOR. If you are intending to buy and sell your property within a short period, go for no-lock in variable rates. If you intend to buy for own stay, you'll sleep better with fixed or relatively fixed rates.

If you have loads of cash savings - variable (with no lock in) is the way to go!

[Blue]

Banks say they never change 'board rate' but they can always change the '+' part. Eg. 'board rate + x%' the x they can change it anytime.

This I beg to differ. The "+/- x%" is fixed under your loan agreement. Board rate is the one that is variable, but as I said, it is less volatile than SOR/SIBOR.

The "+/- x%" changes over time based on prevailing market conditions and bank promotions to attract customers. It is fixed once you signed on the dotted line. This applies to all SOR/SIBOR/Board Rate packages.

[Blue]

Analysts have positioned the low interest rate market phenomenon to last for another year at least until 2011.

Always take market analysts' words with a pinch of salt. If you invest in stock market, you will know how reliable these information or forecast are.

Cantonese famous saying: If there is prophecy, there are no beggars on the street.

[proud owner]

This I beg to differ. The "+/- x%" is fixed under your loan agreement. Board rate is the one that is variable, but as I said, it is less volatile than SOR/SIBOR.

The "+/- x%" changes over time based on prevailing market conditions and bank promotions to attract customers. It is fixed once you signed on the dotted line. This applies to all SOR/SIBOR/Board Rate packages.

you are right

the +/- % is fixed under your loan contract ..

meanwhile Board rate is able to remain 'stable' is becos they are widened .. to cushion volatile SOR/SIBOR .. however much they move ..more often than not .. they still swing within the board rate ..

so board rate could well be the worst rates ..

[Blue]

you are right

the +/- % is fixed under your loan contract ..

meanwhile Board rate is able to remain 'stable' is becos they are widened .. to cushion volatile SOR/SIBOR .. however much they move ..more often than not .. they still swing within the board rate ..

so board rate could well be the worst rates ..

Board Rate packages are quoted as Board Rate - x%.

SOR/SIBOR packages are quoted as SOR/SIBOR + x%.

Board Rate does not change as much as SOR / SIBOR. There will be times when spikes in SOR/SIBOR resulting one in paying more interest than those under Board Rate packages.