More rate hikes ?

[reddevil0728]

Singaporeans are free to move to other countries as long as they can clear immigration hurdles. They often can, often easily.

We discuss geographic arbitrage all the time in "Money Mind." There's nothing particularly novel about it. Approximately 200,000 Singaporeans (and rising) live overseas last I checked.

understand. question i have is, is there anything cheaper in singapore?

 

[BBCWatcher]

understand. question i have is, is there anything cheaper in singapore?

I can think of some:

1. The super popular option is living with your parents — either free or with below market rent. LOTS of Singaporeans do that.

2. Some people live on boats. It's possible the total cost of housing is lower that way. (Can also be higher of course. Just get a huge luxury yacht.) I read an interesting blog article written by someone who's doing this partly for budgetary reasons.

3. Employer-provided/worksite-based housing such as religious housing (resident monks, priests, nuns, etc.), classic "bed above the shophouse" arrangements, live-in tutors/proctors/educators supposedly keeping an eye on residential students, domestic worker arrangements (such as home caregivers, live-in chauffeurs, live-in chefs, etc.), dormitory dwellers, cruise ship staff, certain hotel staff (such as the head chef who probably gets a nice room), Singapore's diplomatic corps (albeit not in Singapore but on Singapore national property overseas), and the very special resident of The Istana. I know of a boarding school teacher who has taught at 3 schools so far who gets his housing (and for his family too) from the school.

The employer-provided/worksite-based housing might be "paid for" via a lower salary/lower wages than otherwise, but it's probable the total adjusted housing cost is often much lower than it would be for a comparable HDB flat.

4. Changi Prison.

5. Residential services at the Institute of Mental Health (and any other such institutions housing serious cases).

 

[stephenbishop]

well it can be argued it is a flawed formula. my point still stands that there isn't a cap

Logically I agree that the formula does not specify a cap. In reality the problem with the formula is the opposite ie in effect it doesn't get off the floor because of vested interests of the reference banks

 

[reddevil0728]

Logically I agree that the formula does not specify a cap. In reality the problem with the formula is the opposite ie in effect it doesn't get off the floor because of vested interests of the reference banks

hence the flaw lor

 

[s0crates]

Large CPFOA outflows via CPFIS into SGS tbills will put pressure on CPFB to make the CPFOA interest rate more competitive viz the financial markets. If the outflows happen but the CPF OA interest rate remains unchanged, the Government rather than the CPF OA savers will need to subsidise the HDB loan borrowers.

I agree with you, but do Singaporeans care enough? They will just complain about the government

 

[ahnyaahnya]

By law, that's the stipulated *floor* (not stipulated rate). So no complaints lah, else must change law liao.

But now it's different, no law saying that interest rate cannot rise with market wor.

The "law " specifies how the rate is to be calculated.... impossible for the rate to go above 2.5% if the banks don't change their practice of offering high promo rates instead of increasing the board rates.

 

[reddevil0728]

The "law " specifies how the rate is to be calculated.... impossible for the rate to go above 2.5% if the banks don't change their practice of offering high promo rates instead of increasing the board rates.

Hence flawed formula that can be “manipulated” lor

 

[ThreeSteps]

I can think of some:

1. The super popular option is living with your parents — either free or with below market rent. LOTS of Singaporeans do that.

2. Some people live on boats. It's possible the total cost of housing is lower that way. (Can also be higher of course. Just get a huge luxury yacht.) I read an interesting blog article written by someone who's doing this partly for budgetary reasons.

3. Employer-provided/worksite-based housing such as religious housing (resident monks, priests, nuns, etc.), classic "bed above the shophouse" arrangements, live-in tutors/proctors/educators supposedly keeping an eye on residential students, domestic worker arrangements (such as home caregivers, live-in chauffeurs, live-in chefs, etc.), dormitory dwellers, cruise ship staff, certain hotel staff (such as the head chef who probably gets a nice room), Singapore's diplomatic corps (albeit not in Singapore but on Singapore national property overseas), and the very special resident of The Istana. I know of a boarding school teacher who has taught at 3 schools so far who gets his housing (and for his family too) from the school.

The employer-provided/worksite-based housing might be "paid for" via a lower salary/lower wages than otherwise, but it's probable the total adjusted housing cost is often much lower than it would be for a comparable HDB flat.

4. Changi Prison.

5. Residential services at the Institute of Mental Health (and any other such institutions housing serious cases).

There is Changi Airport.
https://www.straitstimes.com/singapore/woman-has-lived-at-changi-airport-for-8-years-reporthttps://sg.theasianparent.com/homeless-in-singapore

 

[ahnyaahnya]

Hence flawed formula that can be “manipulated” lor

The banks have to keep board rate low.... if they increase board rates instead of promo rate, OA will go up. Then folks will keep their $ in their OA rather than FD.
By having this big gap between board ( and thereby the OA) and promo rates , they are able to attract more funds from us.

 

[reddevil0728]

The banks have to keep board rate low.... if they increase board rates instead of promo rate, OA will go up. Then folks will keep their $ in their OA rather than FD.
By having this big gap between board ( and thereby the OA) and promo rates , they are able to attract more funds from us.

ya lor flawed lor

 

[lzydata]

There is Changi Airport.
https://www.straitstimes.com/singapore/woman-has-lived-at-changi-airport-for-8-years-reporthttps://sg.theasianparent.com/homeless-in-singapore

Too cold.

 

[DevilPlate]

Once and if the general consensus/expectation that "higher" interest rate is here to stay for longer, CPF will surely have to increase the rates.

Most people still view this high interest rate environment as transitory atm.

 

[DevilPlate]

I agree with you, but do Singaporeans care enough? They will just complain about the government

I noticed it is a very common global phenomenon.

 

[elvintay07]

All these things are caused by the widening of the gap between the rich and poor. If you try to tighten and do some stunts like common prosperity, all the rich ppl will flock to Singapore. Singapore’s policy is pro rich first then collect tax to help the less fortunate. That is correct. You have policies that benefit the less fortunate, then all die together. Many times it is the mentality and not the ability. Many interesting concepts why ppl do the wrong things. The top elite military command schools can teach you a lot of things but guerrilla may fight 3 times better than you.



Rates can continue to rise and will eventually hit a breaking point. But don’t know where is that breaking point or will it ever break. A lot of debate still about soft vs hard vs no landing. This itself can be a PhD thesis

 

[s0crates]

Once and if the general consensus/expectation that "higher" interest rate is here to stay for longer, CPF will surely have to increase the rates.

Most people still view this high interest rate environment as transitory atm.

Surely? I am not counting
on the government to take care of retirement. Cpf is supposed to act independently to help us with our retirement but why do we have to withdraw OA monies for tbills and fixed deposit?

I hope cpf proponents find the inaction a wake-up call on how much they can rely on the government.

 

[ahnyaahnya]

https://sg.yahoo.com/finance/news/global-rate-hike-cycle-has-ways-to-go-menon-says-112810671.html

 

[ahnyaahnya]

Based on an announcement that they made recently, I suspect that the cheng hu may be looking into how to adjust the formula for OA interest, without negatively impacting those on HDB loans .

In the meantime, I'm keeping fingers crossed that rates continue upwards , affect 10 year bond rate, and thus the SA and RA interest rate.

 

[stephenbishop]

I agree with you, but do Singaporeans care enough? They will just complain about the government

I think it is fair to say that Singaporeans care very much about back pocket issues- and so they should.

Hopefully, CPFOA withdrawals via CPFIS into tbills reach the levels necessary to allow the markets to do the needful.

 

[sglandscape]

I think it is fair to say that Singaporeans care very much about back pocket issues- and so they should.

Hopefully, CPFOA withdrawals via CPFIS into tbills reach the levels necessary to allow the markets to do the needful.

Hahaha "do the needful" that's such an odd way of putting it and overly formalised.

Havjng said that, I honestly doubt the base rate will be raised unless the high interest rate environment persists for a couple of years.

Remeber folks, the rate hike only started in March 2022 and picked up in a meaningful manner only from June 2022 onwards. It has barely been a year.

 

[sglandscape]

If interest rates rise 25% from 4%pa to 5%pa, would HDB prices drop by 25%?

usually change in interest rate is looked in basis points or % points chance, not a % change because the overall levels matters.

Increasing 100% when rates were 0.25% is quite different for when rates are 3%.

The "fair value" would be to take the implied rent income net of taxes, then discount it using the projected interest rate path over the remaining lease of the flat. The number I recall when rates are low, would end up with q fair value a bit higher than market value then. Now with rent going up so much, not sure what are the offsetting impact without running the numbers.