cpf historical rates

[chopra]

Why you say so with such confidence?

sorry to jump in.
maybe we can take reference from US banks? i did a quick check with Wells fargo. Looks like there's still no interest bearing saving accounts from them even tho FED has increased. "not short of money"?

 

[reddevil0728]

sorry to jump in.
maybe we can take reference from US banks? i did a quick check with Wells fargo. Looks like there's still no interest bearing saving accounts from them even tho FED has increased. "not short of money"?

yea but that does not mean it is a certainty which is what i am trying to suggest

 

[chopra]

yea but that does not mean it is a certainty which is what i am trying to suggest

ya. unlike aussie/msia/brics, spore n usa banks have been on v low interest rates for e longest time.



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[reddevil0728]

ya. unlike aussie/msia/brics, spore n usa banks have been on v low interest rates for e longest time.



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https://www.cpf.gov.sg/member/infoh...-march-2020-and-basic-healthcare-sum-for-2020
The 3-month average of major local banks’ interest rates is actually computed using the average interest earned on 12-month fixed deposits (FD) and savings deposits (SD) across DBS, OCBC and UOB, with a weighting of 80FD:20SD.

so actually what's mentioned above... FD rate has a 80% impact...

 

[chopra]

CPFB | CPF interest rates from 1 January 2020 to 31 March 2020 and Basic Healthcare Sum for 2020
View news release on CPF interest rates from 1 January 2020 to 31 March 2020 and Basic Healthcare Sum for 2020

www.cpf.gov.sg
The 3-month average of major local banks’ interest rates is actually computed using the average interest earned on
12-month fixed deposits (FD)
and
savings deposits (SD)
across DBS, OCBC and UOB, with a weighting of
80FD:20SD
.
so actually what's mentioned above... FD rate has a 80% impact...

thanks for supplementing further. ok!!




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[sohguanh]

https://www.cpf.gov.sg/member/infoh...-march-2020-and-basic-healthcare-sum-for-2020
The 3-month average of major local banks’ interest rates is actually computed using the average interest earned on 12-month fixed deposits (FD) and savings deposits (SD) across DBS, OCBC and UOB, with a weighting of 80FD:20SD.

so actually what's mentioned above... FD rate has a 80% impact...

But the good FD rates not from those 3 banks currently. So guess CPF rates to rise need to wait

 

[reddevil0728]

But the good FD rates not from those 3 banks currently. So guess CPF rates to rise need to wait

probably. but the point is that it is not arbitrary

 

[sohguanh]

probably. but the point is that it is not arbitrary

I notice the trend that 3 banks are local banks while those good FD rates are foreign bank. My gut sense say local banks don't follow to up is to help Sporeans. Imagine your mortgage loan also rise no more so low and fixed a lot of you will be stressed out.

Me however pay finish my house so pray the local banks to rise instead. So there lies the dilemma.

 

[reddevil0728]

I notice the trend that 3 banks are local banks while those good FD rates are foreign bank. My gut sense say local banks don't follow to up is to help Sporeans. Imagine your mortgage loan also rise no more so low and fixed a lot of you will be stressed out.

Me however pay finish my house so pray the local banks to rise instead. So there lies the dilemma.

it's more of the 3 local banks are so big that they don't have to do as much.

They are not a charity nor a social enterprise. so i am not sure "help sporeans" is really their agenda...

 

[sohguanh]

it's more of the 3 local banks are so big that they don't have to do as much.

They are not a charity nor a social enterprise. so i am not sure "help sporeans" is really their agenda...

Not so directly but look at the other thread readers share they lock in their fixed rate N years mortgage loan. Look at the banks a lot is local

 

[reddevil0728]

Not so directly but look at the other thread readers share they lock in their fixed rate N years mortgage loan. Look at the banks a lot is local

huh don't get your point

 

[andyhtc]

I notice the trend that 3 banks are local banks while those good FD rates are foreign bank. My gut sense say local banks don't follow to up is to help Sporeans. Imagine your mortgage loan also rise no more so low and fixed a lot of you will be stressed out.

Me however pay finish my house so pray the local banks to rise instead. So there lies the dilemma.

The 3 local banks attract a lot of deposits e.g. fixed deposits, salary accounts, savings accounts etc. Therefore, they are flushed with money/liquidity. They are not in a hurry to raise interest rates to attract more deposits. The foreign banks are the opposite.

Eventually, there will be stiff competition for deposits as money flows to the higher interest-bearing countries. The local banks are starting to raise their interest rates and coming up with promotions as more people withdraw their money.

 

[RedsYWNA]

The 3 local banks attract a lot of deposits e.g. fixed deposits, salary accounts, savings accounts etc. Therefore, they are flushed with money/liquidity. They are not in a hurry to raise interest rates to attract more deposits. The foreign banks are the opposite.

Eventually, there will be stiff competition for deposits as money flows to the higher interest-bearing countries. The local banks are starting to raise their interest rates and coming up with promotions as more people withdraw their money.

Waiting for SEA and Grab to give the 3 local banks more food for thought, as they dilly dally on rates increase, haha

 

[reddevil0728]

Waiting for SEA and Grab to give the 3 local banks more food for thought, as they dilly dally on rates increase, haha

It will just be a dent for a few years, then they need to cut all the freebies again

 

[chopra]

I notice the trend that 3 banks are local banks while those good FD rates are foreign bank. My gut sense say local banks don't follow to up is to help Sporeans. Imagine your mortgage loan also rise no more so low and fixed a lot of you will be stressed out.
Me however pay finish my house so pray the local banks to rise instead. So there lies the dilemma.

dun think too much. . ppl will sell sgd n go usa to park usd if thats e case , esp if usa savings equivalent up interest



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[fr33d0m]

modern money theory is different already. Banks, especially large banks such as DBS, OCBC and UOB in local market, do not normally rely on fix deposits to finance loans. They largely depend on overnight interbank market or short term(days to 3-month) interbank market to finance loans. Only small banks, such as new entrants or foreign banks, may rely on fix deposit temporarily or in some books.

Large local banks have pretty full freedom to issue as much loan as they desire based on their capital level regardless of deposit and the risk they are willing to take.

 

[reddevil0728]

modern money theory is different already. Banks, especially large banks such as DBS, OCBC and UOB in local market, do not normally rely on fix deposits to finance loans. They largely depend on overnight interbank market or short term(days to 3-month) interbank market to finance loans. Only small banks, such as new entrants or foreign banks, may rely on fix deposit temporarily or in some books.

Large local banks have pretty full freedom to issue as much loan as they desire based on their capital level regardless of deposit and the risk they are willing to take.

But don’t they have regulated capital requirements?

 

[fr33d0m]

But don’t they have regulated capital requirements?

Capital requirement has little to do with deposit and modern central banks create enough reserves that commercial banks is not short of.

 

[anddrool]

https://www.cpf.gov.sg/member/infoh...-march-2020-and-basic-healthcare-sum-for-2020
The 3-month average of major local banks’ interest rates is actually computed using the average interest earned on 12-month fixed deposits (FD) and savings deposits (SD) across DBS, OCBC and UOB, with a weighting of 80FD:20SD.

so actually what's mentioned above... FD rate has a 80% impact...

It is not easy (In fact very very difficult) for CPF OA rate to be above 2.5% based on the way CPF calculate the interest.
We can just calculate just to break even at 2.5%:
Let's fix the saving interest rate at 0.05%
FD*0.8 + Sav*0.2 = 2.5%
FD*0.8 + 0.05*0.2 = 2.5%
FD = 3.1125%
12 months Fixed deposit rate for the 3 local banks need to be average 3.1125%

From DBS
https://www.dbs.com.sg/personal/rat...posit-txtlink-singapore-dollar-fixed-deposits

Effective Date: 28/06/2022​

Period	$1,000 - $9,999	$10,000 - $19,999	$20,000 - $49,999

12 mths

1.1500

1.1500

0.0500

DBS always offers the highest rate, follow by UOB and OCBC is the lowest.
Using DBS as example, you can see there are different rates for different amount range for the first $50k and this will further average down the 12 months FD rate. It will be much lesser than 1.15%.
We are already in the high interest rate environment and the 12 months FD rate is less than 1.15%.
Note: We cannot use bank promotional 12 months FD rate for the calculation.

What is the probability for the local 3 banks 12 months FD to hit more than 3.1125%. Personally, I think it will be extremely unlikely or near impossible.
Thanks to the CPF formula for calculating CPF OA interest rate, it is extremely difficult to be above 2.5%.
(Anyway it is design in such way, too many things are tied to CPF OA interest, such as HDB loan and CPF don't want to give out more money, more expense)

 

[reddevil0728]

It is not easy (In fact very very difficult) for CPF OA rate to be above 2.5% based on the way CPF calculate the interest.
We can just calculate just to break even at 2.5%:
Let's fix the saving interest rate at 0.05%
FD*0.8 + Sav*0.2 = 2.5%
FD*0.8 + 0.05*0.2 = 2.5%
FD = 3.1125%
12 months Fixed deposit rate for the 3 local banks need to be average 3.1125%

From DBS
https://www.dbs.com.sg/personal/rat...posit-txtlink-singapore-dollar-fixed-deposits

Effective Date: 28/06/2022​

Period	$1,000 - $9,999	$10,000 - $19,999	$20,000 - $49,999

12 mths

1.1500

1.1500

0.0500

DBS always offers the highest rate, follow by UOB and OCBC is the lowest.
Using DBS as example, you can see there are different rates for different amount range for the first $50k and this will further average down the 12 months FD rate. It will be much lesser than 1.15%.
We are already in the high interest rate environment and the 12 months FD rate is less than 1.15%.
Note: We cannot use bank promotional 12 months FD rate for the calculation.

What is the probability for the local 3 banks 12 months FD to hit more than 3.1125%. Personally, I think it will be extremely unlikely or near impossible.
Thanks to the CPF formula for calculating CPF OA interest rate, it is extremely difficult to be above 2.5%.
(Anyway it is design in such way, too many things are tied to CPF OA interest, such as HDB loan and CPF don't want to give out more money, more expense)

difficult doesn't mean impossible.

I think it is not a smart thing to do to assume it wouldn't happen.

it is about how much weight you should put on it.