Singapore mortgage refinance update 2009

Singapore Mortgage refinance update June 2009

Courtesy of www.PropertyBUYER.com.sg

Tel: 6100 - 0608 sms: 9782 - 8606

Email: loans@propertyBUYER.com.sg

http://www.propertybuyer.com.sg/contactus.php

SIbor and SOR rate was all the rage in 2008

Around 2008, Sibor and SOR based home loan rates were all the rage.

Interest rates were SKY HIGH as recent as April to June in 2008. Many

people got their hands burnt by bank's variable rate packages.

As a result of that, many people switched to Sibor or SOR based home loan

rates as it is more transparent.


Many people were Burnt by Variable rate home loan or refinance packages

Variable rates are pegged to the bank's internal reference and typically the

way in which the banks raise rates are somewhat arbitrary. Banks have also

created many reference pegs such as, "mortgage rates", Home loan rate",

board rate; you name it...


SIBOR is transparent, but also Volatile

Sibor on the other hand is very transparent, but it is also volatile, as it can

swing wildly in times of crisis.


Banks Keep raising rates... Until...

Before Sep to Oct 2008, some of the best packages are Sibor + 0.6% to

0.7%. This means that bank's gross lending margin is only 0.6% to 0.7%.


By Oct 2008, some banks have raised their Sibor based lending from Sibor

+ 0.7% to Sibor + 1.25%.

In short, banks have decided that the credit crisis is so bad, if they are going

to lend you at all, they want an arm and a leg to compensate them for the

risks.

We warned in FEB 2009 that Banks will yet again raise rates

For those who remember, we have warned people around Feb 2009 that in

Mar 2009, banks will raise rates again. True enough, most banks raised their

SIBOR or SOR based lending rate from Sibor + 1.25% to around Sibor +

1.75%.


Strangely the banks are not really competing in Mar 2009, many banks soon

fall in line.


Maybank fired the first warning shot by dropping rates

Then suddenly Maybank fired a warning shot by dropping their first year

rates to 1.6% in March 2009.


However it was very targeted at higher credit quality customers with loan to

valuation of only 70%.

We were expecting many banks to change course can start competing to

give consumer a better benefits. That did not materialized in March.


Another foreign bank try to steal Maybank's thunder.

Later in March, another foreign bank kept pace with Maybank by matching

their rates, although the terms were different.


During this time, the local banks did not bite, instead preferring to keep their

rates high. At this time, it was mainly the foreign banks that are lending,

although the processing time has increased from 2 to 3 days to as long as 7

days in some cases.


During this time, some banks launched their relationship based lending

rates.


The local banks did not jump in to compete for a long time and sat at the

sidelines watching.


People expect that Maybank will soon terminate their package and rates will

rise.

Many people expected that the Foreign banks will soon terminate their

promotional packages. By this time, June 2009, a local bank has woken up

from it's 6 months slumber and jumped into the fray to compete having been

dormant for almost 6 months. This will probably kick off a price war with

other local banks jumping in.


EVALUATE REFINANCING YOUR HOME LOAN

The rates are a 1.9% for 3 years fixed.

The rate is pretty good. Do give us a call at 6100-0608 or sms us at

9782-8606.

We do NOT charge a fee as banks pay us separately. Meanwhile,you can

just sit back and relax while we submit your application, follow-up on

approval, update you the progress, check the letter of offer

legal contract for major omissions. So would you rather do the work all my

yourself or would you rather sit back and relax and let us do the work for

you, for free?

loans@propertybuyer.com.sg

Will other banks now jump in to compete?

We think that the rates on offer is quite attractive considering that there

could be some risk of inflation given the massive fiscal stimulus in many

countries, locking-in for 3 years at low rates makes sense.


We don't know if other banks will jump in, but it is likely that other banks will

match or tweak it in a different way with some terms and conditions.


www.PropertyBUYER.com.sg is research-focused mortgage consultant. We do not emphasize Cheap loans, but help property buyers refinance home loans to get the best deal or get new home loans.


ABOUT www.PropertyBUYER.com.sg

Tel: 6100 - 0608 sms: 9782 - 8606

Email: loans@propertyBUYER.com.sg

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