Free Advice/Discussion on Bank Mortgage loan

[andyhtc]

fyi~ Daily SORA touch 2.0537 today.

Usually, this dip happens before a rate hike.

 

[Property_Broker]

Hi @Property_Broker I am in this situation now FHR8 after 2 years of low IR @1.2% now am stuck with 4% in Mar 2023. Which is the best 1 year fixed or 3M SORA @ 2.16%? My view is Q3 ‘23 rates will come down to 3%+ mark.

Hi @tofuking,

I will need your help to share on the following details before i can quote you the best fixed/floating rate.

1) What is your outstanding loan amount?
2) Who is your existing bank that servicing your loan? DBS
3) When is your out of lock in period end?
4) What is your existing interest rate? 4%?
5) What is your property type? HDB or Private property?

You can pm me if the information are too sensitive here.

If you have a view that interest rate will come down around Q3 2023, you can explore the floating rate.

 

[andyhtc]

Surprisingly, Fed has promised a minimum of 0.75% rate hike in 2023 after yesterday's 0.50% rate hike. 2023 is going to be a painful year in terms of borrowing costs and slow economic growth.

Fed pledges more rate hikes despite fears of economy stalling​

• U.S. central bank projects more rate hikes in 2023
• Fed's Powell says not ready to say inflation has peaked
• Powell: Rate-hike pace less important than destination now
• Fed actions will cause pain to economy, Powell says

WASHINGTON, Dec 14 (Reuters) - The Federal Reserve raised interest rates by half a percentage point on Wednesday and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023 as well as a rise in unemployment and a near stalling of economic growth.

The U.S. central bank's projection of the target federal funds rate rising to 5.1% in 2023 is slightly higher than investors expected heading into this week's two-day policy meeting and appeared biased if anything to move higher.

https://www.reuters.com/markets/us/...ikes-inflation-grinch-loses-steam-2022-12-14/

 

[necro17000]

From the lastest Fed meeting, the projection is for interest rate to be at
-5% by Dec 2023,
-4% by Dec 2024
-3% by Dec 2025
And 2.5% after that
Of course projection will change when the macro economics changes. But if you are locking in 2 years rate now, it's good to use these as reference point...(loan rate is roughly fed rate +0.5 to 1%)

 

[andyhtc]

SORA plunged to 1.6457 today

Banks are now flushed with deposits?

 

[tofuking]

Hi @tofuking,

I will need your help to share on the following details before i can quote you the best fixed/floating rate.

1) What is your outstanding loan amount?
2) Who is your existing bank that servicing your loan? DBS
3) When is your out of lock in period end?
4) What is your existing interest rate? 4%?
5) What is your property type? HDB or Private property?

You can pm me if the information are too sensitive here.

If you have a view that interest rate will come down around Q3 2023, you can explore the floating rate.

1. 1M
2. DBS
3. Completed no lock in
4. FHR8 + spread = 2.48% (ends Jan 23)
5. Private

can you PM me thanks!

 

[tofuking]

From the lastest Fed meeting, the projection is for interest rate to be at
-5% by Dec 2023,
-4% by Dec 2024
-3% by Dec 2025
And 2.5% after that
Of course projection will change when the macro economics changes. But if you are locking in 2 years rate now, it's good to use these as reference point...(loan rate is roughly fed rate +0.5 to 1%)

This is very true, guess no choice these days for owners ourselves need to refinance due to TOP recently or later. 4% fixed is the norm over 3M SORA fluctuations.

 

[Property_Broker]

Surprisingly, Fed has promised a minimum of 0.75% rate hike in 2023 after yesterday's 0.50% rate hike. 2023 is going to be a painful year in terms of borrowing costs and slow economic growth.

Fed pledges more rate hikes despite fears of economy stalling​

• U.S. central bank projects more rate hikes in 2023
• Fed's Powell says not ready to say inflation has peaked
• Powell: Rate-hike pace less important than destination now
• Fed actions will cause pain to economy, Powell says

WASHINGTON, Dec 14 (Reuters) - The Federal Reserve raised interest rates by half a percentage point on Wednesday and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023 as well as a rise in unemployment and a near stalling of economic growth.

The U.S. central bank's projection of the target federal funds rate rising to 5.1% in 2023 is slightly higher than investors expected heading into this week's two-day policy meeting and appeared biased if anything to move higher.

https://www.reuters.com/markets/us/...ikes-inflation-grinch-loses-steam-2022-12-14/

Thanks for sharing as always!

I feel that it will depend whether has the bank factor in these future hikes or they have been surprise with this 75 BPS hikes in 2023.

The 2 local banks (OCBC and UOB) launched 4.5% fixed for 2 years last month. It has shocked the market.
But they have offer much lower fixed rate for this month. I wonder if it is because they want to stay competitive with the foreign bank or they want to cover the shortfall of the loan book.

Lets see how is the trend for next month(Jan).

 

[Property_Broker]

1. 1M
2. DBS
3. Completed no lock in
4. FHR8 + spread = 2.48% (ends Jan 23)
5. Private

can you PM me thanks!

Hi @tofuking,

Sure~ PMed you shortly.

 

[AhChiCha]

Hello! would like to ask experienced sifus!
I am currently deciding whether to go for Floating rate or fixed rate. Had latest offer at rate of 3.9% Locked in two years but not able to do pre-partial payment with fixed rate. The fixed rate seems to be going down. 1 week ago was 4.25% @ 2 years.
Floating rate seems risky with continue interest hike by US next year as well but this week SORA Daily rate seems to be going down to Sept 2022 rate which makes me wondering would it be worth to risk Floating loan?

I have few months buffer for start paying loan. Est April 2023.

 

[elvintay07]

SORA plunged to 1.6457 today

Banks are now flushed with deposits?

Relax la Andy. U mentioned before the rise always crash. Maybe next week we see 5% interest.

 

[elvintay07]

Hello! would like to ask experienced sifus!
I am currently deciding whether to go for Floating rate or fixed rate. Had latest offer at rate of 3.9% Locked in two years but not able to do pre-partial payment with fixed rate. The fixed rate seems to be going down. 1 week ago was 4.25% @ 2 years.
Floating rate seems risky with continue interest hike by US next year as well but this week SORA Daily rate seems to be going down to Sept 2022 rate which makes me wondering would it be worth to risk Floating loan?

Strange why bank reduce their fixed rate? I saw in another thread, they said Fed may increase interest to 7%. So banks should aim for 8% fixed then correct. Let’s wait for expert property broker

 

[AhChiCha]

Strange why bank reduce their fixed rate? I saw in another thread, they said Fed may increase interest to 7%. So banks should aim for 8% fixed then correct. Let’s wait for expert property broker

year end promotion before they start celebrate their earning? haha

 

[The_Davis]

Strange why bank reduce their fixed rate? I saw in another thread, they said Fed may increase interest to 7%. So banks should aim for 8% fixed then correct. Let’s wait for expert property broker

Give hope for desperate owners?

then just before their apartment top raise rate?

 

[Property_Broker]

Hello! would like to ask experienced sifus!
I am currently deciding whether to go for Floating rate or fixed rate. Had latest offer at rate of 3.9% Locked in two years but not able to do pre-partial payment with fixed rate. The fixed rate seems to be going down. 1 week ago was 4.25% @ 2 years.
Floating rate seems risky with continue interest hike by US next year as well but this week SORA Daily rate seems to be going down to Sept 2022 rate which makes me wondering would it be worth to risk Floating loan?

I have few months buffer for start paying loan. Est April 2023.

Hi @AhChiCha ,

It is for purchasing or refinace/repricing?

It is common for the bank to offer fixed rate package without partial prepayment feature. Because they will need to hedge the fixed rate with some other instrument . So they dont allow you to do partial prepayment.

Daily Sora is very volatile since 1st of December. You can see the last few page as i always give update on the SORA rate. I dont think daily SORA will be holding around less than 2% for long. It should be at least holding around 2%~3%+ range.

(Disclaimer: Do take note this is my personal view.)

Based on the yesterday FOMC meeting, i think interest rate should still continues to head up at least another 75 BPS.

Hence interest rate should continues to go for the next 3 months at least.

There might be a slight chance that interest rate will come down by end of next year.

So i will recommend that you should go with 1/2 years fixed rate or 1 years lock SORA package(If you feel that interest rate has peaked and confirm coming down next years).

Reason for not going with 3/4/5 years fixed:
It is not advisable to lock in such a longer period when the interest rate is historical high(Expensive) and further more interest rate might drop by end of 2023.

 

[momoeagle]

SORA plunged to 1.6457 today

Banks are now flushed with deposits?

This was interesting, so I decided to check through some numbers for fun from MAS website.

Interestingly, we see that from before to after Fed's meeting, overnight SORA typically dropped before bouncing higher.

For 2022:
In May, from 0.67 to 0.47
In Jun, from 0.80 to 0.40
In Jul, from 1.94 to 1.53.
In Sep, from 2.35 to 1.62
In Nov, from 3.17 to 2.60
In Dec now, from 4.01 to 1.65

December computations are likely slightly off. Of the 10 days so far, half of the days had insufficient data and Contingency SORA was used for computation.

Because SORA is based on volume weighted average, we do not know how and why the transactions were done, and what happened just from the data. But it does show that at least within the first half of December, transactions were down greatly.

Definitely not a year end event. Such an event did not occur in 2020 and 2021 as I track the data.

From this, I think banks will hold on any mortgage rate increase until after CNY, which just nice coincides with the next Fed meeting.

 

[The_Davis]

So no change to fixed rate for next 1 month?

 

[maumu]

actually hoping for the (anticipated) recession to come asap so that the rates can finally start to drop but looks like won't happen till late 2023 or 2024...

there's no chance for the rates to drop back to 1.xx% next year right? need to make a decision whether to fully redeem loan by March/April.

 

[Perishable]

actually hoping for the (anticipated) recession to come asap so that the rates can finally start to drop but looks like won't happen till late 2023 or 2024...

there's no chance for the rates to drop back to 1.xx% next year right? need to make a decision whether to fully redeem loan by March/April.

1% rate in 2023 is impossible. Simply impossible. FED May cut rates towards end of 2023 but we won’t see 1% range for 2023, 3% maybe.

 

[Perishable]

What is the current spread for sora 3M amongst banks?