SIBOR rates and home loan repricing

[Darryn]

There will be some people that will be caught off guard if mortgages go up...

 

Hope not too many, 

[Spring]

There will be some people that will be caught off guard if mortgages go up...

 

Hope not too many, 

 

Well you are kind hearted to hope not many people get caught off guard.

Unfortunately, here got some posters who waiting for bloodshed to happen and they get a kick out of it

 

Praise you tmr, cheers!!

[Jamesc]

yes, this is a place to share and learn. One cannot presume to know it all.

 

You haven't met one of our most prolific posters

 

he believes he knows it all.

 

  

[Wildfaye29]

You haven't met one of our most prolific posters

 

he believes he knows it all.

 

  

 

who? who? is it from the coe threads??

[Carwoman]

You haven't met one of our most prolific posters

 

he believes he knows it all.

 

  

Thanks for the heads up.

who? who? is it from the coe threads??

prolific must be posting a few thousands. fast and furious?

 

I can accept strong opinions and those who think they are right when the majority have a different view. They actually can be right.

 

However, i don;t think anyone should have a know it all attitude.

[Yewheng]

Singapore interest rates rise ahead of Fed's decision

 

http://www.straitstimes.com/business/economy/local-interest-rates-rise-ahead-of-feds-decision?xtor=CS3-20

 

 

SINGAPORE - Local interest rates are inching up and investors are on edge as the countdown to Thursday's decision by the United States Federal Reserve begins in earnest.

 

It is widely expected that the Fed will raise interest rates from near-zero levels - the first such rise in nine years - and the effects are already rippling through Singapore's financial and currency markets.

 

 

The greenback has strengthened against the Singdollar. More importantly, for mortgage holders and business owners, the cost of lending is going up.

 

The three-month swap offer rate (SOR), a benchmark for commercial loans and some home loans, spiked to a new three-month high of 1.59168 per cent yesterday from 1.50597 per cent last Friday and 1.39520 per cent on Thursday. The previous high was at 1.56409 per cent on Sept 8.

 

It is now almost four times higher than at this time last year.

 

It is a similar story with the three-month Singapore interbank offered rate (Sibor). The Sibor, which is used extensively to price home loans, hit a two-month high of 1.12865 per cent yesterday and is now almost three times higher than its level 12 months ago.

 

This means the monthly repayments on a $500,000 loan with a 25-year period pegged to Sibor will be $168 more than a year ago, while one pegged to the three-month SOR will be $262 more.

 

 

 

The US rate hike has been flagged for several months, during which a rising number of home owners have switched to fixed-rate mortgages, and a new product pegged to fixed deposit rates was launched.

 

SOR loans became popular around 2010-2011, when SOR started to dip below Sibor.

 

Most home loans extended by DBS Bank, Singapore's largest provider of mortgages, are pegged to Sibor, with fewer than 500 based on SOR, said Mr Tok Geok Peng, its executive director of secured lending.

 

Personal finance portal MoneySmart.sg estimates that 45 per cent of mortgages are pegged to fixed deposit rates, 50 per cent to Sibor and the remainder to SOR, based on loan take-ups in the past two months.

 

ABN Amro chief economist Han de Jong noted that this will "undoubtedly be one of the best flagged rate increases ever, so it is hard to see how people can be caught off guard, but you never know".

 

DBS Bank economist Eugene Leow said: "We expect a 25-basis point hike but much of this has already been priced into the market.

 

"We suspect that Sibor and SOR rates will likely rise by a smaller magnitude than US rates."

 

DBS sees Sibor at 1.4 per cent by the first quarter next year.

 

The rate talk has also hit stocks and currencies as investors wait on the sidelines for a decision. The US dollar rose from 1.4095 to the Singdollar last Friday to 1.4129 yesterday while local share investors, who seem determined to keep their powder dry until later in the week, left the benchmark Straits Times Index down 0.69 per cent yesterday.

Just when majority of people think this time round fed confirm will raise interest rate. Wait there is another suprised yet again. I believe this time round, no matter whether fed raise or don't raise interest rate, our local bank will still raise interest rate anyway. So there will be no much difference for local bank.

[Mercs]

Well you are kind hearted to hope not many people get caught off guard.

Unfortunately, here got some posters who waiting for bloodshed to happen and they get a kick out of it

 

Praise you tmr, cheers!!

Nicely put bro, such posters just reflects badly on their personal character.

 

They hope for bloodshed, I just continue to post more positive news

[Spring]

Nicely put bro, such posters just reflects badly on their personal character.

 

They hope for bloodshed, I just continue to post more positive news

Good for you bro! It serves no purpose to hope for bloodshed cos end of day being so small, we too will be affected one way or another, perhaps only the top 10-15% of Singaporeans are cushioned.

 

Being in the finance industry, I know quite a few of these people and even they don't hope for bloodshed and in fact told me they hope for all round stability n prosperity for all Singaporeans so they they too can continue to enjoy their fruits and being humane, want fellow Singaporeans to enjoy the country's fruits as well. Maybe that's why they are in the top % of Singaporeans with this kind of humble attitude! Cheers n hv a good day ahead!!

[RadX]

Well you are kind hearted to hope not many people get caught off guard.

Unfortunately, here got some posters who waiting for bloodshed to happen and they get a kick out of it

 

Praise you tmr, cheers!!

 

 

WEll said buddy!  Glad that most of us here are human!

[OmOm]

Winter and the biting cold come regardless of whether people believe in them or not.

 

IMHO, it is important that we do not ignore the red flags that have been appearing. why not be prepared for contingencies? Having a positive mindset does not mean pushing aside practical risks, and pointing out danger signs is not a negative behaviour if it helps those who are unprepared get ready for crisis.

 

This is not born of misplaced delusional messianic behaviour but a simple hope that folks are more ready when the dominoes eventually fall. 

 

Today the danger signs in the global economy are clear and present - asset prices have been hitting record highs, levels that have been directly or indirectly fuelled by debt and borrowings that are unsustainable based on today's median incomes. 

 

Defaults in the bond markets are increasing by the day and local financial institutions have been diligently raising the rates at which they lend out money, ahead of the upward shifts in SIBOR and SOR.

 

Commodity prices are in a downward spiral and O&G companies that were once the darlings of investors are now on the precipice of collapse due to their inability to refinance mid and long-term debt.

 

These are the equivalent of the rumbling earth and smoke wisps that appear as precursor to the eruption of a volcano. Turning away from the signs does not make the problem go away. The emerging cracks are hints of deeper foundation fractures.

 

 

Nicely put bro, such posters just reflects badly on their personal character.

They hope for bloodshed, I just continue to post more positive news

 

[Showster]

US Federal Reserve opens meeting to put an end to crisis-era policy

 

The US Federal Reserve building in Washington, DC.PHOTO: BLOOMBERG

PUBLISHED2 HOURS AGO

WASHINGTON (REUTERS) - Eight years after a devastating recession opened an era of loose US monetary policy, the Federal Reserve on Tuesday (Dec 15) began a two-day meeting at which it is expected to turn in the other direction and raise rates in an increasingly normal economy.

 

The decision will be released on Wednesday at 2pm (Thursday 3am, Singapore time), with markets prepared for an initial 25 basis point "lift-off" that would move the Fed's target rate from the zero lower bound to a range of between 0.25 and 0.50 percentage points. It is to be followed by a news conference by Fed chair Janet Yellen to elaborate on the central bank's latest policy statement.

 

Markets on Tuesday set a positive stage for the Fed's potentially historic turn. US stock indices were up around one per cent, bond yields moved higher, and analysts said that after weeks of preparation a surprise decision not to hike would be the more disruptive choice.

 

"Given the strength of the signals that have been sent it would be credibility destroying not to carry through," former Treasury Secretary Larry Summers, a sceptic of the need to raise rates right now, said in remarks published on Tuesday on his website.

 

The rate hike will separate the Fed from major central banks in Tokyo, Frankfurt, Beijing and elsewhere that are all battling to stimulate their economies and generate growth.

 

The initial hike expected on Wednesday will still leave US policy extremely loose, and Fed officials have signalled they will act cautiously from that point forward to nurture a tepid recovery.

 

Markets and analysts will focus on the exact language the Fed uses in its statement to justify the hike and describe how it will evaluate the timing of a second and subsequent steps.

 

Analysts at TD Securities said they expected the statement and updated economic forecasts from policymakers to take a hawkish tilt that emphasises every meeting will be "live" for a possible hike.

 

As of September, Fed officials expected perhaps four rate hikes next year. "The statement... should be relatively hawkish. The Fed will look to project confidence," the analysis said.

 

Though modest, the Fed's token first step remains fraught.

 

In the days to come, the Fed will have to prove that a new set of tools for managing interest rates will work as expected, see how higher US rates affect domestic and global financial conditions, and hope that weak world demand and commodity prices do not lead to an overall bout of deflation and force the Fed to reverse course.

 

To be considered a success, the Fed needs its rate hike to be followed next year by continued US growth, continued low unemployment, and, perhaps most in doubt, a turn higher in inflation.

 

For all the talk of abnormal times and changes in underlying economic fundamentals, the Fed is pinning its hopes on a very conventional premise - that the US consumer will keep spending at recent strong rates, encouraged by low unemployment and the apparent beginnings of a rise in wages. "The American consumer is in full gear and there is nothing but tailwind... They are right to be confident," said Mr Mark Zandi, chief economist with Moody's Analytics.

 

The turn towards higher rates has been months in the making.

 

The Fed under Ms Yellen has carefully stripped its policy statement of most future-oriented promises to keep rates low, along with ending crisis-era asset purchase programmes.

 

With unemployment falling steadily through the year, there has been steadily less justification for crisis-era policy, and a sense among policymakers that they could balance the higher rates sought by "hawks" with a slow pace of subsequent increases.

 

Still, opinion is not unanimous. Some Fed policymakers have said they worry the world economy is too weak for the Fed to successfully march off on its own. Labour groups on Tuesday said pockets of employment and wage growth overall are still too weak to warrant tighter financial conditions. "There's no reason to think that the pace of economic growth today is excessive and needs to be slowed because of incipient inflation," Mr Josh Bivens, research director at the Economic Policy Institute, said in calling on the Fed not to hike.

 

"Right now, lower unemployment that boosted wage and price growth would be an affirmatively good thing. Wages and prices are clearly growing too slowly."

[Spring]

Winter and the biting cold come regardless of whether people believe in them or not.

 

IMHO, it is important that we do not ignore the red flags that have been appearing. why not be prepared for contingencies? Having a positive mindset does not mean pushing aside practical risks, and pointing out danger signs is not a negative behaviour if it helps those who are unprepared get ready for crisis.

 

This is not born of misplaced delusional messianic behaviour but a simple hope that folks are more ready when the dominoes eventually fall.

 

Today the danger signs in the global economy are clear and present - asset prices have been hitting record highs, levels that have been directly or indirectly fuelled by debt and borrowings that are unsustainable based on today's median incomes.

 

Defaults in the bond markets are increasing by the day and local financial institutions have been diligently raising the rates at which they lend out money, ahead of the upward shifts in SIBOR and SOR.

 

Commodity prices are in a downward spiral and O&G companies that were once the darlings of investors are now on the precipice of collapse due to their inability to refinance mid and long-term debt.

 

These are the equivalent of the rumbling earth and smoke wisps that appear as precursor to the eruption of a volcano. Turning away from the signs does not make the problem go away. The emerging cracks are hints of deeper foundation fractures.

Your posts hv always been insightful and in no way associated with those doomsday merchant forumers who don't hv facts but just laugh off others demise.

 

Factual posts be it positive or negative are always welcome. Speculation without foundation although can be a personal opinion reeks of a poster with hidden anxieties or perhaps other agendas if done on a regular basis.

 

Bro @mercs posts though mostly positive in nature are not of a personal opinion but taken from factual reports from various sources. Admittedly, it's not always good to read too much into reports be they positive or otherwise as statistics can be presented in a skewed way as well. U have countered with warning signs which should be heeded as well n thus both you n Mercs posts I read with enthusiasm always, cheers!

Edited December 16, 2015 by Spring

[Lala81]

There will be some people that will be caught off guard if mortgages go up...

 

Hope not too many, 

 

think quite tough lah. This rate hike is like the most confirmed rate hike ever... 

[Vidz]

at the end of the day, live within own means, more importantly live happy and fulfilling lives...

 

not from one 'tidal wave' to another... 

[Duckduck]

think quite tough lah. This rate hike is like the most confirmed rate hike ever... 

 

rate hike is priced in already, question is is it 0.1%, 0.25% or 0.5% etc... & also is it 1 & done or will the fed say that more coming soon...

 

anyway for those who wanna know if global stocks gona crash, which dollar yen all i can say,,,

[Showster]

History and all competing theories for reference. Do consider the relevant and non relevant areas.

 

https://en.m.wikipedia.org/wiki/Great_Depression

[Lala81]

Your posts hv always been insightful and in no way associated with those doomsday merchant forumers who don't hv facts but just laugh off others demise.

 

Factual posts be it positive or negative are always welcome. Speculation without foundation although can be a personal opinion reeks of a poster with hidden anxieties or perhaps other agendas if done on a regular basis.

 

Bro @mercs posts though mostly positive in nature are not of a personal opinion but taken from factual reports from various sources. Admittedly, it's not always good to read too much into reports be they positive or otherwise as statistics can be presented in a skewed way as well. U have countered with warning signs which should be heeded as well n thus both you n Mercs posts I read with enthusiasm always, cheers!

 

cup is half full or half empty is really just a matter of outlook.

 

Though the local and global economy climate is challenging at this point. 

rate hike is priced in already, question is is it 0.1%, 0.25% or 0.5% etc... & also is it 1 & done or will the fed say that more coming soon...

 

anyway for those who wanna know if global stocks gona crash, which dollar yen all i can say,,,

 

dollar is strengthening last few days.

 

zzz. less reason to buy from amazon 

[Kusje]

think quite tough lah. This rate hike is like the most confirmed rate hike ever... 

 

I've been waiting for it since 6 months ago and preparing for it since I took my loan....

 

Not sure if there are any out there who really think SIBOR can remain below 1% forever.