SIBOR rates and home loan repricing

[Angcheek]

Got an mcf expert advised full cash for home

 

But peasants like me can only go for hdb loan

 

Banks don't even wanna lend me money

 

 

[Enye]

waaa U rich sia ... HDB int chow chow about double the comm int

 

 

build one BTO in Sentosa ... sure damn atas

If you are unaware, this is precisely how the system makes the Gini coefficient higher and higher

 

 

[Lala81]

I am almost 100% sure they will raise once in Dec 2015. For market confidence. After that, anybody's bet.

 

I think they will do so, but i think subsequent interest rate hikes will be slower than what the bears predict.

[Angcheek]

If you are unaware, this is precisely how the system makes the Gini coefficient higher and higher

 

 

[Enye]

hahaha they wan happy cell ?

 

My this "Gini" co-efficiency .. is a better choice.

Sibei gay

 

@porker u handle this... Your kinda stuff

 

I m outta here

 

 

[Jamesc]

I hope the TS took my advice and got a cap

 

and is now enjoying protection against rising rates.

 

[Voodooman]

I think they will do so, but i think subsequent interest rate hikes will be slower than what the bears predict.

US interest rate may rise faster than expected, according to Goldman Sachs. US economy is 70% domestically driven, so once the Americans start to open their wallets, it can be quite a juggernaut but many also believe US cannot afford to raise rates by much due to their mountains of debts. We live in interesting times whereby Dow Jones often falls on positive US economic data, how screw up can that be?

 

http://fortune.com/2015/11/25/goldman-sachs-stock-market-predictions-2016/

[Icedbs]

I hope the TS took my advice and got a cap

 

and is now enjoying protection against rising rates.

 

 

err bro, TS asked this 3 years (Jan 2012)  ago. And if he did took a fix rate at that time (1% + SIBOR, cap at 1.49% for 3 years), he would have missed out the much lower variable rate package (0.75%+SIBOR). By Jan 2015, 3-month sibor is just 0.46%, so the variable package is actually better for that 3 years.

 

 

 

 

[Showster]

Why huh?

Hi Sister @Pinobii, indeed a 0.25% raise is interest rates represent an increase in 45 billion of payments made due to increased interest alone through the debts owed by US Govt. But the payment also goes back in part to their people which can be stimulatory in nature through stimulating spending and increasing the ability of the Govt to loan more thereafter. Recently, the debt ceiling was raised to facilitate this.

 

But to go up a full percent represents an increase in 180 billion paid out annually on top of the existing rates. But increase they must, as it will be a huge strike against confidence if they don't. But given what we understand about their culture, it should take a long time to get there to a full percent, provided they have the strong will to get there even years later. And as confidence gets boosted, you can be sure US Govt will loan more.

 

This is my personal interpretation only.

[Matrix0405]

At this moment, what is the fair housing loan rate? 2.3%? or now still can get below 1.x% for repricing? 

 

[Ken138]

Some banks still offering fix rate below 2% .. :)

[Voodooman]

Hi Sister @Pinobii, indeed a 0.25% raise is interest rates represent an increase in 45 billion of payments made due to increased interest alone through the debts owed by US Govt. But the payment also goes back in part to their people which can be stimulatory in nature through stimulating spending and increasing the ability of the Govt to loan more thereafter. Recently, the debt ceiling was raised to facilitate this.

 

But to go up a full percent represents an increase in 180 billion paid out annually on top of the existing rates. But increase they must, as it will be a huge strike against confidence if they don't. But given what we understand about their culture, it should take a long time to get there to a full percent, provided they have the strong will to get there even years later. And as confidence gets boosted, you can be sure US Govt will loan more.

 

This is my personal interpretation only.

180 billion is barely 1% of a 18.1 trillion economy. Higher growth / taxes will pay for it but confidence is priceless.

 

It is good to be Americans, everyone helps to pay for your profligacy.

 

Can elaborate a bit on the culture thingy in your post?

[Spring]

As recently as 2 weeks ago, OCBC and UOB were offering fixed first 2 yr rates at 1.68% but I think it has been withdrawn by now.

 

Maybe can wait the next promo but shld be higher abit but my take is if fixed first 2 yr rates are reasonable, can opt for that. 3rd yr maybe higher but you can do some partial repayment and also re-nego with the bank during the 3rd year but you normally can't re-finance with another bank until after the 3rd year.

[Showster]

One year's fiscal deficit is about half a trillion. 

 

http://www.reuters.com/article/2015/10/15/us-usa-budget-idUSKCN0S92K920151015#lEZI0zrudkAsXJda.97

 

How does one get to 18 trillion? What does this tell about their culture? 

 

18 trillion may be one year's GDP only, something like 56K USD per capita. But this amount assumes all the non working persons like children and retirees are contributing 56K.

 

180 billion may be just 1% of the GDP but it's 4-6 months of budget deficit. If they raise a full % soon, they will hit the next ceiling much faster. 

 

 

 

180 billion is barely 1% of a 18.1 trillion economy. Higher growth / taxes will pay for it but confidence is priceless.

It is good to be Americans, everyone helps to pay for your profligacy.

Can elaborate a bit on the culture thingy in your post?

 

[Voodooman]

One year's fiscal deficit is about half a trillion.

 

http://www.reuters.com/article/2015/10/15/us-usa-budget-idUSKCN0S92K920151015#lEZI0zrudkAsXJda.97

 

How does one get to 18 trillion? What does this tell about their culture?

 

18 trillion may be one year's GDP only, something like 56K USD per capita. But this amount assumes all the non working persons like children and retirees are contributing 56K.

 

180 billion may be just 1% of the GDP but it's 4-6 months of budget deficit. If they raise a full % soon, they will hit the next ceiling much faster.

Spend and spend? Can't disagree.

 

I am not an expert on this so feel free to correct my misconceptions.

 

A 1% interest rate hike will push interest burden up by 180 billion but if GDP is growing at 3%, it will also mean GDP growth of 550 billion. Based on US' tax revenue to GDP ratio of 27%, the govt will collect additional tax of 150 billion, so it is not so dicey after all.

 

I wonder how they fix the debt issue in the past?

 

[Alpha78]

Spend and spend? Can't disagree.

 

I am not an expert on this so feel free to correct my misconceptions.

 

A 1% interest rate hike will push interest burden up by 180 billion but if GDP is growing at 3%, it will also mean GDP growth of 550 billion. Based on US' tax revenue to GDP ratio of 27%, the govt will collect additional tax of 150 billion, so it is not so dicey after all.

 

I wonder how they fix the debt issue in the past?

 

image.jpeg

 

USA has been looking like a Ponzi scheme since years back. To a layman like me, printing money, raising debt ceiling, just to repay interest coupons without paying down the principal, looks like it's going to be forever indebted. Do they even have intention to pay down their debts?

[KoreanLover]

Is it worthwhile to go for FHR (Fixed Deposit Home Rates)?

 

I understand that even though it is still considered as the bank's board rate, bank will try not to adjust it because it is peg to their fixed deposit rates.

 

If they increase the FHR rates, it will mean that they will need to pay more interest to their fixed D holders as well.

[Showster]

The most difficult part is nobody can be an expert regarding this issue. And nobody, including US policymakers, is willing to let US default take place. Their domestic and international creditors such as China, do not want to let them default. And if they really default and USD becomes worthless, what happens to currencies pegged to them?

 

Consider this: is revenue = profit, money that you put in the pocket and can be saved or used to repay previous debts? Not really. US has been running a deficit all the time since 20+ years ago. Their current year deficit is 400+B. If increase full % interest results in extra pure profit as you described, their deficit is still just under 400+B. Moreover, it's not a given that it will definitely grow revenue. If it results in foreclosures and people reducing risks, revenue might drop instead and widen the deficit plus pay more interests. So you can bet that US will be extremely careful about it.

 

Any solution? Your chart holds part of the answer (1940s). The other part can be sensed from what is happening globally right now.

 

Spend and spend? Can't disagree.

 

I am not an expert on this so feel free to correct my misconceptions.

 

A 1% interest rate hike will push interest burden up by 180 billion but if GDP is growing at 3%, it will also mean GDP growth of 550 billion. Based on US' tax revenue to GDP ratio of 27%, the govt will collect additional tax of 150 billion, so it is not so dicey after all.

 

I wonder how they fix the debt issue in the past?

 

image.jpeg

Edited November 27, 2015 by Seohster