sibor is getting phased out!

[Wind30]

49 minutes ago, inlinesix said:

Rather than worrying about being screwed by Bank, why not be debt free in 3 years?

... as people has pointed out, interest rate is expected to stay very Low. 
we are not talking about worried getting Bankrupted over interest payments by protecting a good deal consumers got. 
 

if interest rate stays so Low, u really should not aspire to be debt free. Like I said, almost all my cpf is still parked with cpf, why pay of a [email protected]% interest???

[Showster]

My gut feel is in 2021, residential properties will see a huge boom in price and rental, while commercial / industrial will be in the doldrums.

That should roughly be the time for my last move for commercial / industrial unless residential is still Super cheap. The last move will almost certainly be in full cash (very limited loan) due to TDSR.

[Wind30]

13 minutes ago, Showster said:

Let’s be clear on this.

I will be disappointed if our Sibor loans get switched to Sora with disadvantageous conditions that we can not negotiate. My term for my major loan for 1 property is 1m Sibor plus 0.3%. After a few more months (or a year, can’t remember), it becomes 1M Sibor plus 0.4% and stays there for two more years. After that it become 3M Sibor plus 0.4%. Remember how strongly I advocated for MCFers including yourself to take Sibor loans at a time when everyone say must go for fixed at close to 3%!
 

When banks change their package, such as when Telcos change their plans to remove those plans that are seen as not advantageous, it is a business consideration. 
 

Our mortgage signed with banks (or any commercial identity) always has a timeline of validity no longer how perpetual we sign the contract for. Can you imagine a tenant signing a contract with you for three years and insisting you cannot unilaterally decide to raise rents three years later? Can you “guarantee” you will be happy with existing rent 10 years down the road?

 

We have got a very cheap ticket for a most valuable item that people dream to have. Now is a good time to think how and who else we can support everyone else, banks, tenants, others. So for my second minor mortgage, I chose 1.5% for 5 years to help support banks during the lull and perhaps buffer against sudden rises 3 years down the road. Sibor can also go up then?

 

You can’t win it all just based on the merit of one signature.

.... housing loan contracts are expected to last more than three years, it’s very different from rental. U do know that right? For the housing loan I took in 2009, I don’t think I refinanced for more than 6 years. For places like USA, housing loan Rate is fixed for like 30 years or something. 
I think The banks can renegotiate individually and consumers can punish them for renegading on those SIBOR loans, like what CIMB tried to do. 
They should not be allowed to collude together and do this as a group such that consumers have zero choice in the matter.

[Showster]

3 minutes ago, Wind30 said:

.... housing loan contracts are expected to last more than three years, it’s very different from rental. U do know that right? For the housing loan I took in 2009, I don’t think I refinanced for more than 6 years. For places like USA, housing loan Rate is fixed for like 30 years or something. 
I think The banks can renegotiate individually and consumers can punish them for renegading on those SIBOR loans, like what CIMB tried to do. 
They should not be allowed to collude together and do this as a group such that consumers have zero choice in the matter.

I am not so much a rights person.

I take a whole system analysis and consider what works best for the whole system.

The system also works this way and we can’t change it.

Who knows if by then, packages for Sora might be much more attractive, for example if interest rates rise above 3%?

[awhtc]

17 minutes ago, Yewheng said:

I really still don't understand sibor, sora.. Can anyone explain in layman the difference between these 2?

From this link on the methodology (https://www.abs.org.sg/docs/library/calculation-methodology-abs-benchmarks_17072019), SIBOR is based on the projected interest rates that the banks could borrow at: The rate at which an individual Contributor Bank could borrow funds, were it to do so by asking for and then accepting the interbank offers in reasonable market size, just prior to 11:00 a.m. Singapore time.

From this link on the SORA methodology (https://www.abs.org.sg/benchmark-rates/about-sora#:~:text=The Singapore Overnight Rate Average,around 6%3A30 pm daily), SORA is based on actual transacted interest rates: The Singapore Overnight Rate Average (SORA) is the volume-weighted average rate of unsecured overnight interbank SGD transactions in Singapore between 9:00 am and 6:15 pm.

So SORA is the real thing and cannot cheat while SIBOR is based on banks' estimation.

[inlinesix]

19 minutes ago, Wind30 said:

... as people has pointed out, interest rate is expected to stay very Low. 
we are not talking about worried getting Bankrupted over interest payments by protecting a good deal consumers got. 

if interest rate stays so Low, u really should not aspire to be debt free. Like I said, almost all my cpf is still parked with cpf, why pay of a [email protected]% interest???

I have a very pessimistic view on CPF when i retire.

In the name of protecting my money, i will get a monthly withdrawal till i die.

I rather spent it now.

[awhtc]

24 minutes ago, Showster said:

My gut feel is in 2021, residential properties will see a huge boom in price and rental, while commercial / industrial will be in the doldrums.

That should roughly be the time for my last move for commercial / industrial unless residential is still Super cheap. The last move will almost certainly be in full cash (very limited loan) due to TDSR.

This is a very optimistic view.  Most landlords including residential are only hoping to survive in 2020 and 2021.  The decrease in interest rate could help to mitigate the decline in rental though.  It takes about 1-2 quarters of a growing economy for companies to resume hiring.  Hence, the earliest we see a revival of the rental market could be Q4 2021.  Notwithstanding, I don't foresee a huge boom in residential rental unless our GDP can sustain >3% for 2-3 consecutive years.

Edited July 31, 2020 by awhtc

[awhtc]

31 minutes ago, Wind30 said:

... as people has pointed out, interest rate is expected to stay very Low. 
we are not talking about worried getting Bankrupted over interest payments by protecting a good deal consumers got. 
 

if interest rate stays so Low, u really should not aspire to be debt free. Like I said, almost all my cpf is still parked with cpf, why pay of a [email protected]% interest???

I'm already concerned whether the SA 4% in CPF can be sustained given our weak economic growth and a decade of poor track records of our government (Temasek, but GIC unknown) and GLCs investments.

[Yewheng]

18 minutes ago, awhtc said:

From this link on the methodology (https://www.abs.org.sg/docs/library/calculation-methodology-abs-benchmarks_17072019), SIBOR is based on the projected interest rates that the banks could borrow at: The rate at which an individual Contributor Bank could borrow funds, were it to do so by asking for and then accepting the interbank offers in reasonable market size, just prior to 11:00 a.m. Singapore time.

From this link on the SORA methodology (https://www.abs.org.sg/benchmark-rates/about-sora#:~:text=The Singapore Overnight Rate Average,around 6%3A30 pm daily), SORA is based on actual transacted interest rates: The Singapore Overnight Rate Average (SORA) is the volume-weighted average rate of unsecured overnight interbank SGD transactions in Singapore between 9:00 am and 6:15 pm.

So SORA is the real thing and cannot cheat while SIBOR is based on banks' estimation.

Oh thanks.. Now I understand.. 

[Voodooman]

14 minutes ago, awhtc said:

This is a very optimistic view.  Most landlords including residential are only hoping to survive in 2020 and 2021.  The decrease in interest rate could help to mitigate the decline in rental though.  It takes about 1-2 quarters of a growing economy for companies to resume hiring.  Hence, the earliest we see a revival of the rental market could be Q4 2021.  Notwithstanding, I don't foresee a huge boom in residential rental unless our GDP can sustain >3% for 2-3 consecutive years.

At least you are still lucid and not chasing shadows on how delays in project completion will boost rental next year.  

Really facepalm.

 

[Voodooman]

33 minutes ago, awhtc said:

From this link on the methodology (https://www.abs.org.sg/docs/library/calculation-methodology-abs-benchmarks_17072019), SIBOR is based on the projected interest rates that the banks could borrow at: The rate at which an individual Contributor Bank could borrow funds, were it to do so by asking for and then accepting the interbank offers in reasonable market size, just prior to 11:00 a.m. Singapore time.

From this link on the SORA methodology (https://www.abs.org.sg/benchmark-rates/about-sora#:~:text=The Singapore Overnight Rate Average,around 6%3A30 pm daily), SORA is based on actual transacted interest rates: The Singapore Overnight Rate Average (SORA) is the volume-weighted average rate of unsecured overnight interbank SGD transactions in Singapore between 9:00 am and 6:15 pm.

So SORA is the real thing and cannot cheat while SIBOR is based on banks' estimation.

Sora is overnight rate while Sibor used is usually 1 month or 3 months, how to reconcile given time value of money?

[awhtc]

2 minutes ago, Voodooman said:

At least you are still lucid and not chasing shadows on how delays in project completion will boost rental next year.  

Really facepalm.

 

The private property supply data is here: https://www.ura.gov.sg/realEstateIIWeb/supply/search.action (interpret by shifting 1 year ahead of expected TOP year as developers usually build faster by 1-1.5 years).  In 2021 and 2022, we will see a big supply.  Hopefully, the economy can rebound by then.  I posted too much here.  Taking a long break for now 😁

[Showster]

37 minutes ago, Voodooman said:

At least you are still lucid and not chasing shadows on how delays in project completion will boost rental next year.  

Really facepalm.

 

Like I mentioned, if by then the residential situation is still bad or worse, I would still opt residential for the last one I buy.

[Showster]

3 hours ago, awhtc said:

The private property supply data is here: https://www.ura.gov.sg/realEstateIIWeb/supply/search.action (interpret by shifting 1 year ahead of expected TOP year as developers usually build faster by 1-1.5 years).  In 2021 and 2022, we will see a big supply.  Hopefully, the economy can rebound by then.  I posted too much here.  Taking a long break for now 😁

Everything WAS supposed to run like clockwork. 
 

Now 2020 has literally very little or no more supply, 2020 supply of a few thousand goes to 2021, and 2021 goes 2022 and so on...
 

We can review again in 2021.

[Fitvip]

21 hours ago, inlinesix said:

When ERP go up, B.M.W. lo.

When interest goes up, downside and full loan redemption.

That means the traditional MCF norm has been breached liao. Isn't MCF norm no full cash no talk? This morning I went for my breakfast also full cash wan!🤣🤣🤣

[Jamesc]

15 hours ago, Showster said:

US GDP contracted 32% this quarter and they are prepping another bazooka.

Likelihood for US, the next step is negative interest rates.

That's good news.

They pay you interest to take loans.

Can faster come?

[Jamesc]

Anyone taking home loans now don't lock yourself in.

With negative interest rates they will pay you interest

instead of you pay them.

Welcome to the new normal.

I think I like it very much.

[Throttle2]

22 hours ago, Matoonia said:

Yes I simple man as long as there is a 1% arbitrage maintained between loan rate and CPF I am more than happy.

Care to elaborate