Property Fix rate or floating rate?

[V_for_Vanilla]

Floating rate is my preference.

 

[sohguanh]

DBS has just raised its rates on all home loan packages to 2.75 per cent per annum, placing it the highest among the trio of local banks.

This comes after both UOB and OCBC raised rates on their home loan packages. OCBC and UOB’s fixed rates for 2-year home loan packages are at 2.65 per cent per annum.

About 3 months ago, the DBS rate was 1.65 per cent for a 2-year fixed loan and 1.85 per cent for 3-year loans.

https://www.businesstimes.com.sg/ba...te-to-275-per-annum-highest-among-local-banks

1.65,1.85 to 2.75 is a big jump! Furthermore home loan typically we are talking about few hundred K correct? And this 2.75 is for fixed rate so if float ? Not that it affect me but I am concerned for fellow readers who still have not finished paying their home loan. Don't resign unless you already secure the next job.

 

[BBCWatcher]

Floating rate is my preference.

OK, but these rates are headed up too. Here are the 1M and 3M compounded SORAs reported on June 29, 2022, according to the MAS:

1M SORA: 0.9671
3M SORA: 0.7434

So let's suppose you have a 1M SORA + 0.80% floating rate. That'd mean your mortgage would adjust to 1.7671% if the adjustment were made today. DBS for example is currently offering 3M SORA + 1.00% floating with a 2 year lock-in. That's equivalent to 1.7434% if based on today's 3M compounded SORA.

It's sure looking like most of the borrowers with 1.4% and 1.5% fixed rate mortgages for 5 years have done well/will do well. Congratulations to them.

 

[BBCWatcher]

1.65,1.85 to 2.75 is a big jump! Furthermore home loan typically we are talking about few hundred K correct? And this 2.75 is for fixed rate so if float ? Not that it affect me but I am concerned for fellow readers who still have not finished paying their home loan. Don't resign unless you already secure the next job.

2.75% is DBS's fixed rate for your choice of either 2 or 3 years. Minimum loan size is S$100,000. To be clear, that's not the lowest fixed rate offer in the market right now.

 

[dork32]

So after N years fixed refinance with another bank and repeat? Lucky mine is HDB loan less hassle. Best is don't borrow too much else first N years pay interest only seldom touch the principal cuz for HDB loan I check sibei siong for first N years. All the best to you all new mortgage loaner I finished mine after 15 years dun wan go through all that again

you are right, i need to refinance and reprice every few years. I am staying in my home for 24 years. i have not paid interest higher that 2.2% for the last 19 years, do a bit a repricing and save a few thousand dollars, i dont mind doing that.

lucky mine is not hdb loan, the interest is so high.

best is borrow as much as possible and use as little cpf as possible. let your cpf roll interest in.

do i care if the loan quantum does not seem to go down in the first N years. i can see my cpf oa building up because the interest earn over this time.

i do agree that for new mortgages, hdb loan is the way to go.

if you have just finished your 15-year loan recently. i would like to thank you for supporting our garmen. you would have added tens of thousands into our coffers compared to the a bank loan.

dun want to go through that? in fact, i am enjoying my ride so much that i increased my loan quantum by 400k and extended my loan by 15 years, 8 years back when i had the opportunity.

but i must admit my adventure is coming to an end. i believe when my fixed rate ends in 1.5 years time, I will be very sad. I am going to have peace of mind.

 

[dork32]

2.75% is DBS's fixed rate for your choice of either 2 or 3 years. Minimum loan size is S$100,000. To be clear, that's not the lowest fixed rate offer in the market right now.

who would fix 2.75%, when hdb is 2.6%. but there are people that do not qualify for hdb loans

 

[dork32]

OK, but these rates are headed up too. Here are the 1M and 3M compounded SORAs reported on June 29, 2022, according to the MAS:

1M SORA: 0.9671
3M SORA: 0.7434

So let's suppose you have a 1M SORA + 0.80% floating rate. That'd mean your mortgage would adjust to 1.7671% if the adjustment were made today. DBS for example is currently offering 3M SORA + 1.00% floating with a 2 year lock-in. That's equivalent to 1.7434% if based on today's 3M compounded SORA.

It's sure looking like most of the borrowers with 1.4% and 1.5% fixed rate mortgages for 5 years have done well/will do well. Congratulations to them.

this is bad. 1m sora was 0.3++ 1.5 months back

 

[reddevil0728]

who would fix 2.75%, when hdb is 2.6%. but there are people that do not qualify for hdb loans

also those who think HDB loan might increase?

 

[dork32]

also those who think HDB loan might increase?

hdb loan increase, then i switch to bank loan lah. hdb loan got no lock in one

 

[reddevil0728]

hdb loan increase, then i switch to bank loan lah. hdb loan got no lock in one

You are learned about such stuff Ma.

a lot blur blur one

 

[dork32]

It's sure looking like most of the borrowers with 1.4% and 1.5% fixed rate mortgages for 5 years have done well/will do well. Congratulations to them.

you are right, for these people, their game continues for at least 5 more years.

 

[BBCWatcher]

who would fix 2.75%, when hdb is 2.6%. but there are people that do not qualify for hdb loans

2.75% fixed (2 or 3 years) evidently isn't the lowest fixed rate in the mortgage market right now, so very few people should take that particular DBS offer. However, there are some borrowers who cannot refinance with another lender because their outstanding loan quantum is too low or because they're unemployed. So if they currently have a mortgage with DBS then some of them might still want to reprice at 2.75% fixed for 2 or 3 years.

 

[dork32]

2.75% fixed (2 or 3 years) evidently isn't the lowest fixed rate in the mortgage market right now, so very few people should take that particular DBS offer. However, there are some borrowers who cannot refinance with another lender because their outstanding loan quantum is too low or because they're unemployed. So if they currently have a mortgage with DBS then some of them might still want to reprice at 2.75% fixed for 2 or 3 years.

what those hdb loan people say have finally come true, after 19 years. if you are on bank loan, then jialat, cannot switch back to hdb loan

if my outstanding loan is low, i will consider paying up everything.

 

[BBCWatcher]

what those hdb loan people say have finally come true, after 19 years. if you are on bank loan, then jialat, cannot switch back to hdb loan

Not necessarily. It depends on how you view the current floating rate offers. There are plenty of SIBOR-linked floating rate offers that are still below 2.0% (computed today), although obviously you've got to assume some lock-in risk. Also, other lenders currently seem to be matching the HDB Concessionary Loan rate with their fixed rates. DBS is a bit of an outlier at this instant.

if my outstanding loan is low, i will consider paying up everything.

The higher mortgage interest rates get the more interesting accelerated repayment becomes. But I don't think we're there quite yet. If you "panicked" the last time mortgage interest rates spiked in Singapore then you got it wrong (i.e. could've gotten it much better) because that spike was relatively short lived. Obviously we don't know exactly what the future holds, but history could repeat itself.

The primary appeal of HDB Concessionary Loans amidst the persistently low bank mortgage rates of the recent past was (and still is) that you don't have to put as much money down. I still think that advantage makes a lot of sense for most people who qualify. Then they can decide whether to refinance with a bank mortgage later.

 

[dork32]

Not necessarily. It depends on how you view the current floating rate offers. There are plenty of SIBOR-linked floating rate offers that are still below 2.0% (computed today), although obviously you've got to assume some lock-in risk. Also, other lenders currently seem to be matching the HDB Concessionary Loan rate with their fixed rates. DBS is a bit of an outlier at this instant.

in this rising interest rate environment, you still want to float? go ahead loh.

1 Apr 1 month sora is 0.3
30 Jun 1 month sora is 0.9.
and we are not nearing the end.

SIBOR is already half dead. still can get sibor loans these days?

 

[dork32]

The higher mortgage interest rates get the more interesting accelerated repayment becomes. But I don't think we're there quite yet. If you "panicked" the last time mortgage interest rates spiked in Singapore then you got it wrong (i.e. could've gotten it much better) because that spike was relatively short lived. Obviously we don't know exactly what the future holds, but history could repeat itself.

my view is that this is all luck. you have to reprice when the lock in ends. most would be paying higher than market rate if they dont. most repricing contracts include a lock in. you cannot just jump out of the lock in anytime your want.

paying a higher rate while hoping for the rate to go down. this is exactly what soh say. this is gambling. yes i gamble with shares, i gamble with reits, i gamble at turf club/casino. i do not gamble with the roof over my head.

the recent spike was short lived coz covid came. what is coming to coz interest rate to go down now?

 

[dork32]

The primary appeal of HDB Concessionary Loans amidst the persistently low bank mortgage rates of the recent past was (and still is) that you don't have to put as much money down. I still think that advantage makes a lot of sense for most people who qualify. Then they can decide whether to refinance with a bank mortgage later.

if you cannot afford the 5% cash and 20% cpf, you really should be looking for a cheaper home.

taking hdb loans during those years really hit you on 2 sides. you get hit by the higher interest rates. you get hit by the higher quantum which translates to more interest

 

[maumu]

pretty sad (and anxious as well) that my current 'low' rate (1.35%) will end in May 2023. by then... I think SORA will be quite high and fixed rate even higher. probably have to revert to using CPF to pay first while waiting for the rates to come down....

 

[reddevil0728]

pretty sad (and anxious as well) that my current 'low' rate (1.35%) will end in May 2023. by then... I think SORA will be quite high and fixed rate even higher. probably have to revert to using CPF to pay first while waiting for the rates to come down....

Cant part cash part cpf?

 

[stephenbishop]

https://www.straitstimes.com/busine...s-hit-new-high-of-308-with-latest-move-by-uob