sibor is getting phased out!

[Wind30]

4 minutes ago, Showster said:

Relax eh. Last time CIMB customers complain about floor rate, got rescinded. 

This is a transparent contract involving up to one third of mortgages. If yours has a clause stating the rate after the first three years, then it is benchmarked there. Unilateral changes by the banks means lawsuits and unnecessary publicity. Only we can sign ourselves out of the good deal. 

 That being said, those taking new mortgages need to look out for it. 

So many years later, maybe loan cleared by then. 

... did you read about the proposal?

If it goes through, it is not one bank trying to get out of a bad deal, it is every bank doing the same. They won't care about publicity because all the banks are SUPPOSED to do it. Although it does not take effect like soon, the banks are going to finalise the plan so people cannot complain 3 years later if they don't complain now. 

I don't think you can sue them lah... legally I think they can change the interest rate anytime they want.... it is really about publicity and looking bad.

[awhtc]

Price fixing is a reportable case to CASE/Competition and Consumer Commission of Singapore?

E.g. https://www.channelnewsasia.com/news/singapore/fresh-chicken-distributors-fined-price-fixing-competition-10708064

Edited July 30, 2020 by awhtc

[inlinesix]

SIBOR is interbank borrowing interest rate.

SORA is weighted average overnight borrowing interest rate.

What is the difference?

[awhtc]

 

1 minute ago, inlinesix said:

SIBOR is interbank borrowing interest rate.

SORA is weighted average overnight borrowing interest rate.

What is the difference?

The key is not the difference, it is a collective price-fixing practice that is potentially coming up.

Edited July 30, 2020 by awhtc

[Wind30]

1 minute ago, inlinesix said:

SIBOR is interbank borrowing interest rate.

SORA is weighted average overnight borrowing interest rate.

What is the difference?

https://abs.org.sg/docs/library/sibor-reform-and-the-future-landscape-for-sgd-interest-rate-benchmarks.pdf

There is a detailed explanation.

I don't really care which rate they use but if they can assure that we will be paying similar interest rate after switching, I am ok. 

I don't think it is ok for the bank to use this as a way to reprice the added risk post Covid into loan agreements they have signed pre-covid. 

[inlinesix]

2 minutes ago, awhtc said:

The key is not the difference, it is a collective price-fixing practice that is potentially coming up.

Under SIBOR, not possible meh?

[inlinesix]

10 minutes ago, Wind30 said:

https://abs.org.sg/docs/library/sibor-reform-and-the-future-landscape-for-sgd-interest-rate-benchmarks.pdf

There is a detailed explanation.

I don't really care which rate they use but if they can assure that we will be paying similar interest rate after switching, I am ok. 

I don't think it is ok for the bank to use this as a way to reprice the added risk post Covid into loan agreements they have signed pre-covid. 

Currently, 3mth SIBOR is 0.5%.  Can any bank assure you that it will not raise to 5% in 5 years?

My only advise is debt redemption over the transition period.

Edited July 30, 2020 by inlinesix

[awhtc]

This is like hawker centre undergoing an upgrading that is good for the customers and customers find prices go up after returning.  I believe the banks will introduce addition clauses to their advantage when switching the customer's package from SIBOR/SOR to SORA - it's all in the fine prints.

[Yewheng]

Can someone explain in layman term for Sora? 

The rates fluctuates everyday? 

[awhtc]

The banks will take the opportunity to build in new clauses to protect their profit.

 

Explainer: Why Sora is likely to replace Sibor as Singapore’s benchmark interest rate

...

Responding to a query on whether the switch would mean that consumers would have to pay higher interests, Mrs Ong Ai-Boon, director of ABS, said that benchmark interest rate is an independent reference rate that reflects market conditions.

But the full price of a loan is dependent on the all-in rate, which includes factors such as the banks' cost of funding and the customer’s credit profile.

“The full cost of the loan package doesn’t necessarily change when a customer chooses a different benchmark rate,” she said.
 

https://www.todayonline.com/singapore/explainer-why-sora-likely-replace-sibor-singapores-benchmark-interest-rate

[Yewheng]

I think these articles explain why going to switch to sora. Coz sibor, the pricing is forward looking and many cannot accurately predict what will happen in the future. So let's say price this interest rate that predict then say 1 Yr ahead will have good economy but end up different case how? So that's why sora come into the picture. Correct me if I am wrong. 

[ToyotaShuttle]

2 hours ago, Wind30 said:

🙂 is deputy managing director very big??? I thought everyone is director in financial industry...

Ignore them. They think we need to kowtow to someone just because the fella is Managing director lol.

[awhtc]

15 minutes ago, Yewheng said:

I think these articles explain why going to switch to sora. Coz sibor, the pricing is forward looking and many cannot accurately predict what will happen in the future. So let's say price this interest rate that predict then say 1 Yr ahead will have good economy but end up different case how? So that's why sora come into the picture. Correct me if I am wrong. 

My severely limited understanding is SIBOR is similar to LIBOR, which was manipulated by a trader in 2015 (https://www.bbc.com/news/business-19199683).  Hence, Singapore wanted to switch to a more transparent system in 2017.  MAS tested a modified version of SIBOR but it did not work as well as SIBOR.  They looked around for an alternative and found SORA, which was already in place to replace SOR by 2021.  After 2021, Singapore will transit from SIBOR to SORA and complete by 2024.  This is done with a good intention but it is also a good opportunity for the banks to clean up ultra-low SIBOR interest rates.

Please let me know if I got it wrong! 😬

 

Edited July 30, 2020 by awhtc

[Yewheng]

Ya.. Coz normal layman people will not understand the difference and what it all mean..

Edited July 30, 2020 by Yewheng

[Matoonia]

Heng ah... I'm just out of my lock-in period and just refinance with DBS 5 years fixed 1.5%. Sleep well for next 5 years no need huan lo simi SIBOR, SOR, or SORA

[Wind30]

8 minutes ago, Matoonia said:

Heng ah... I'm just out of my lock-in period and just refinance with DBS 5 years fixed 1.5%. Sleep well for next 5 years no need huan lo simi SIBOR, SOR, or SORA

you do know that 1.5% is a pretty high rate compared to what older sibor pegged loans is enjoying now. 

That is my whole point. The banks are unilaterally trying to force all sibor pegged loans to reprice to a potentially higher interest package in 3 years time which is very unfair.

I don't see them clamoring to reprice housing loans when interest rates are going up 2 years ago. 

[Unfazed]

3 hours ago, Throttle2 said:

Muayhahahah, laugh until i roll on the floor. Naivety at its ultimate leh...

Cant believe some very smart people, like this one, still think that its their prerogative.

listen up, everything is to the lenders discretion ok? 

If lender wants to call on borrower to pay up today, also can. 

It’s technically very very easy to make someone with debt, a bankrupt.

 

Woken up to a new world?   Or been asleep in your own world this whole time?

 

good luck, and dont forget, huat ah!

Wah...the email machiam like boss questioning subordinate like that sia. As if banks must give low interest like that, did someone get the impression that banks "owe" lenders small interest rate? 

It is all abt supply & demand, bank need u or vice versa. Cant imagine a GEP asking such a qn. Me bo tak chek one also dun hv cheek to kpkb to MAS like that lah. Sekali, kenna slap with an answer, "low interest? Owe u one ah?!" Kiang tio ho, mai geh kiang. Why sia suay ownself, right? 😖

Edited July 30, 2020 by Unfazed

[Wind30]

.... I really hope @Throttle2 knows he is in my ignored list... 

He should really use it. I find MCF a much better place after I learnt how to use it. just a couple of buttons, I can't see what @Unfazed post too.

 

I usually don't like to add anyone into ignored list as it makes reading MCF fragmented but I searched Unfazed posts and I don't think I am missing much....

Edited July 30, 2020 by Wind30