Property Fix rate or floating rate?

[dork32]

Not quite. You gave a 20 year scenario. If the interest rate goes up for 2 years then comes down for 18 then the win (the 18 years) is much bigger than the spike (2 years). It's not tens v. tens as if they're even in that scenario.

i have mentioned that if the rates comes down after 2 years, i would make tens of thousands.

but who can confirm that it will come down? if it did not and stayed up there for prolonged period, i would have lost tens of thousands

i remember the hdb loan advocates were saying bank loans are subjected to fluctuations. hdb loans are safer. these people have been saying this for the past 19 years. ok finally what they prophesized came true. imagine how much they would have lost if they have stayed on hdb loans.

 

[BBCWatcher]

i am talking about paying up 100% of the loan. this is not partial repayment. i dont have to worry running out of cash repaying the loan.

I think you're missing the point.

Let's suppose your liquid assets are worth $500,000 total (inclusive of CPF OA for these purposes) and you have a $495,000 outstanding mortgage. Interest rates rise to a whopping 2.8% (in a 5.6% inflation economy? interesting...), and you freak out. So you take $495,000 of your $500,000 liquid assets and retire your mortgage.

....OK, next month you lose your job and your spouse needs an expensive medical procedure that's only partially insured. You have $5,000 of liquid assets, a fully paid up home (no mortgage), but also no income. Does not compute. You're technically solvent (because you have lots of home equity), but you have a very serious cash flow problem. If it's a private condo you could ordinarily borrow against it, but you lost your job and (sorry) that won't work. (Lenders generally won't do business with an unemployed borrower.) If it's a HDB flat you can't even do that, job or no job. Personal loan? Well, that's genuinely expensive...and did we mention you have no job?

So now you've got to sell your home, quickly, to raise the cash to keep afloat. Probably not what you wanted.

Situations vary, but this is one possible (even fairly common) situation.

 

[V_for_Vanilla]

Everyone's point is valid because everyone's situation, needs, and psychology differs.

 

[dork32]

I think you're missing the point.

Let's suppose your liquid assets are worth $500,000 total (inclusive of CPF OA for these purposes) and you have a $495,000 outstanding mortgage. Interest rates rise to a whopping 2.8% (in a 5.6% inflation economy? interesting...), and you freak out. So you take $495,000 of your $500,000 liquid assets and retire your mortgage.

....OK, next month you lose your job and your spouse needs an expensive medical procedure that's only partially insured. You have $5,000 of liquid assets, a fully paid up home (no mortgage), but also no income. Does not compute. You're technically solvent (because you have lots of home equity), but you have a very serious cash flow problem. If it's a private condo you could ordinarily borrow against it, but you lost your job and (sorry) that won't work. (Lenders generally won't do business with an unemployed borrower.) If it's a HDB flat you can't even do that, job or no job. Personal loan? Well, that's genuinely expensive...and did we mention you have no job?

So now you've got to sell your home, quickly, to raise the cash to keep afloat. Probably not what you wanted.

Situations vary, but this is one possible (even fairly common) situation.

you are the one that is missing the point. i have liquid asset of 1 mil and 500k loan. i am a retiree.

i take a gamble on the loan. interest rate goes against me. i have to fork out 600k to clear my 500k loan. it eats into my retirement funds. this is taking a big risk especially as a retiree i dont have many ways to replenish the loan

 

[dork32]

I think you're missing the point.

Let's suppose your liquid assets are worth $500,000 total (inclusive of CPF OA for these purposes) and you have a $495,000 outstanding mortgage. Interest rates rise to a whopping 2.8% (in a 5.6% inflation economy? interesting...), and you freak out. So you take $495,000 of your $500,000 liquid assets and retire your mortgage.

....OK, next month you lose your job and your spouse needs an expensive medical procedure that's only partially insured. You have $5,000 of liquid assets, a fully paid up home (no mortgage), but also no income. Does not compute. You're technically solvent (because you have lots of home equity), but you have a very serious cash flow problem. If it's a private condo you could ordinarily borrow against it, but you lost your job and (sorry) that won't work. (Lenders generally won't do business with an unemployed borrower.) If it's a HDB flat you can't even do that, job or no job. Personal loan? Well, that's genuinely expensive...and did we mention you have no job?

So now you've got to sell your home, quickly, to raise the cash to keep afloat. Probably not what you wanted.

Situations vary, but this is one possible (even fairly common) situation.

also if for your situation. market goes against you. does the 500k loan just disappear? and have you tried refinancing a loan without a salary? what interest have got to pay?

what you are doing is just pushing the problem further down the road.

bbc's mentality is just not that of a normal sinky

 

[dork32]

bbc does not how to quantify risk. he does not understand the simple concept of standard deviation. he does not understand bigger standard deviation = bigger risk.

just answer if you understand this. if you dont, you should not be here talking rubbish

and if you understand this, tell me which situation will result in a bigger standard deviation.

 

[dork32]

Everyone's point is valid because everyone's situation, needs, and psychology differs.

like i said i do not rebut you when you say floating is better. it does have its advantages and drawbacks.

you are right that it depends on situation.

 

[dork32]

have you heard of the term high risk, high returns

risk = standard deviation
returns = expected x

if the interest is higher than 2.5$, my expected is negative. why should i tolerate a higher risk as well.

i will still paydown my loan if the interest is above ,

if the interest rates were to drop, i can always do an equity loan or a cash out.

 

[chopra]

I refinanced 5 years DBS 1.5%. Didn’t do any research, my mortgage broker contacted us herself.

I refinanced my loan in jan 2022 , for it to kickstart in apr 2022 (it is a long story for another time on this). My loan package in 1.4mil, 1.9% fixed for 5yrs for a private property. On a side note, we have cash/cpf to pay fully in 5yrs.

U said u refinanced in apr 2022? Can i check if it’s private or hdb? Loan amt? I feel like lodging a complain to dbs. I rem someone else also shared their package in Apr2022 is 1.5%. Dunno why i am given such a bad package despite me asking multiple times for a better one n reminding that my loan amt is not particularly small

 

[reddevil0728]

I refinanced my loan in jan 2022 , for it to kickstart in apr 2022 (it is a long story for another time on this). My loan package in 1.4mil, 1.9% fixed for 5yrs for a private property. On a side note, we have cash/cpf to pay fully in 5yrs.

U said u refinanced in apr 2022? Can i check if it’s private or hdb? Loan amt? I feel like lodging a complain to dbs. I rem someone else also shared their package in Apr2022 is 1.5%. Dunno why i am given such a bad package despite me asking multiple times for a better one n reminding that my loan amt is not particularly small

I thought such info for DBS on their website?

 

[iceblendedchoc]

I refinanced my loan in jan 2022 , for it to kickstart in apr 2022 (it is a long story for another time on this). My loan package in 1.4mil, 1.9% fixed for 5yrs for a private property. On a side note, we have cash/cpf to pay fully in 5yrs.

U said u refinanced in apr 2022? Can i check if it’s private or hdb? Loan amt? I feel like lodging a complain to dbs. I rem someone else also shared their package in Apr2022 is 1.5%. Dunno why i am given such a bad package despite me asking multiple times for a better one n reminding that my loan amt is not particularly small

Nov 2021 for private.

You didn't ask your RM for a better rate? HSBC was offering me a better rate but at 3 years rate. My wife prefer 5 years so we went with her choice.

 

[chopra]

I thought such info for DBS on their website?

ya dbs manager gave me e package in e website. ie 5yr 1.95%



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[reddevil0728]

ya dbs manager gave me e package in e website. ie 5yr 1.95%



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then what's there to complain about? if it is not advertised, no obligation for them to provide a better deal what.

 

[chopra]

Nov 2021 for private.
You didn't ask your RM for a better rate? HSBC was offering me a better rate but at 3 years rate. My wife prefer 5 years so we went with her choice.

ahh i see. urs was nov 2021. i asked many times n v thick skinned way but to no avail.

my previous loan back then only matured in apr 2022. in jan 2022, i sense all these hikes coming, so i also kinda negotiated with the bank manager (not rm, but the loan banker) to let me chope the prevailing 1.95% fixed 5yr package first. they let me chope in jan 2022, for the package to start running in apr 2022 while letting my previous package of 1.65% continue to run.

and indeed, a few weeks later in feb/mar 2022, dbs took away 5yr fixed rates le


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[chopra]

dbs rates based on what i checked now. let’s see if they revise

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[BBCWatcher]

For what it’s worth the latest U.S. GDP figures (-0.9% in 2Q2022) spooked U.S. financial markets, so market interest rates actually fell despite the Fed’s interest rate announcement. Therefore I wouldn’t expect an immediate rate hike in Singapore unless some other factors intervene.

 

[andyhtc]

For what it’s worth the latest U.S. GDP figures (-0.9% in 2Q2022) spooked U.S. financial markets, so market interest rates actually fell despite the Fed’s interest rate announcement. Therefore I wouldn’t expect an immediate rate hike in Singapore unless some other factors intervene.

It takes a few weeks for the banks to assess and revise their fixed rates.

Citibank expects Sep hike to be 0.75% as well as the inflation is now very hard to tame.

 

[simsim1234]

dbs rates based on what i checked now. let’s see if they revise

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I am on DBS FHR6 housing loan, currently paying 1.55% pa (even after 0.5% rate hike), so I don't see any point to take up fixed rate loan at >2% pa. I doubt rate can go up much higher than another 1% pa.

 

[reddevil0728]

I am on DBS FHR6 housing loan, currently paying 1.55% pa (even after 0.5% rate hike), so I don't see any point to take up fixed rate loan at >2% pa. I doubt rate can go up much higher than another 1% pa.

fixed rate at least provide sense of certainty. whether it will go up more than another 1% is only a guess at this stage

 

[chopra]

I am on DBS FHR6 housing loan, currently paying 1.55% pa (even after 0.5% rate hike), so I don't see any point to take up fixed rate loan at >2% pa. I doubt rate can go up much higher than another 1% pa.

thanks for sharing


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