Some banks have increased interest margins on Housing Loans

[Dennis Ng]

From yesterday, 12 April 2010, several banks, DBS, OCBC and Stand Chart have announced increase in interest margins on their Housing Loan packages.

The increment varies, can be 0.1% to as high as 0.7%, depending on the type of packages. Other banks have NOT increased their interest margins yet.

SIBOR is likely to remain low for the next 3 to 6 months. However, in year 2011, U.S. is likely to increase interest rates and SIBOR is likely to go up as well. However, even if interest rates are increased, they are likely to still remain low.

Actually, any rates below 2.5% is still considered Low Housing Loan interest rates in Singapore, since HDB charges 2.6% for Concessionary Rate Loans and in year 2007, during good times, interest rates were 4% to 5%.

[star88]

Hi Dennis,

During good time HDB loan interest is 4%-5%? Since year 2006 we are paying 2.6%...We are paying $1,480 for our HDB loan every month for 30 yrs loan, $700+ is paying interest every mth. If HDB increase interest to 4-5%, it is very high!!!

Can we get a hosing loan interest rate below 2.5% or 2.6% from bank? What I know is HDB loan is the lowest interest rate compare to bank.

[Dennis Ng]

Hi Dennis,

During good time HDB loan interest is 4%-5%? Since year 2006 we are paying 2.6%...We are paying $1,480 for our HDB loan every month for 30 yrs loan, $700+ is paying interest every mth. If HDB increase interest to 4-5%, it is very high!!!

Can we get a hosing loan interest rate below 2.5% or 2.6% from bank? What I know is HDB loan is the lowest interest rate compare to bank.

I actually mean that Bank Housing Loan interest rates in year 2007 was as high as 4% to 5%, not HDB loan.

However, I do know that in 1999, HDB Concessionary Rate interest rate was 4.41%, becos I have a HDB loan myself.

There is a very slim chance for HDB rate to go up to this level again, becos the formula for HDB Housing Loan interest rate is =

20% x average Bank Saving account interest rate +

80% x Average Bank Fixed Deposit account interest rates.

or the higher of Min Interest rate of 2.6%. Which is why HDB loan interest rate is now 2.6%.

So unless Fixed Deposit interest rates go up to above 3%, it is unlikely for HDB Loan interest rate to move up at all.

Currently, Bank Housing Loan interest rate is about 1.5%. However, I do not advise anyone to switch their HDB loan to Bank becos Bank Housing Loan interest becos:

1. the switch to Bank is NOT reversible. If interest rate of bank increase, you can't switch back.

2. based on past experience, Bank Housing Loan interest rates can go to 4% to 5% (in 1990s and in year 2007).

Hope this clarifies.

.

[investor10]

Hi Dennis,
When I applied private property loans or refinance, your staff always asked for the latest notice of assessment and past 12 months CPF contributions for employed.

What if when one is retired, but say owns 2 private properties, 1 own stay and the other rented out. Both still with outstanding morgage of say 70% with 20 years of servicing left. Can one take an equity loan for a new purchase and if so how much loan can one take. Thanks

[Dennis Ng]

Hi Dennis,
When I applied private property loans or refinance, your staff always asked for the latest notice of assessment and past 12 months CPF contributions for employed.

What if when one is retired, but say owns 2 private properties, 1 own stay and the other rented out. Both still with outstanding morgage of say 70% with 20 years of servicing left. Can one take an equity loan for a new purchase and if so how much loan can one take. Thanks

For self-employed, you need to provide latest 2 years of Tax Assessment. Banks would typically take an average of the 2 years' income as reference.

Robert Kiyosaki advocates Passive Income (Rental Income) over Active income (employment or self-employment).

On the other hand, Banks in Singapore prefers Active Income to Rental Income.

Do you know that Banks would internally do a 50% discount of your Rental Income? So, if your total monthly rental income is S$10,000, banks only take it as S$5,000.

One's age also is factored into the equation. Thus, if you're above 60, that affects as well.

There is NO general answer to your question. Each case is assessed separately on its own merit. Thus, best thing is still for you to call www.HousingLoanSG.com 's general line 6737 8801 and one of my staff will assist you. Try to go back to the same staff as each client is being taken care of by a specific staff, to ensure better service and follow-up.

All of our staff are trained by my wife and myself, with combined 34 years of bank lending experience. And the also accumulate valuable on-the-job learning through each enquiry they receive. Any questions they are not sure of the answer, they will check with my wife and/or myself. We strive to only give clients answers which we have verified the correctness, especially when it pertains to rules of CPF and HDB etc, etc.

[investor10]

Thanks Dennis , will give your staff a call to understand more.

[el171s]

Hi Dennis

With SIBOR hitting all time low, should we go for a longer term fixed rate now of 3 to 5 yrs for our refinancing or for SIBOR-pegged rates?

Regards

[Dennis Ng]

Hi Dennis

With SIBOR hitting all time low, should we go for a longer term fixed rate now of 3 to 5 yrs for our refinancing or for SIBOR-pegged rates?

Regards

interest rates are likely to remain low for the next 1 year. Even 2nd year interest rates likely to be below 3%.

The Choice really depends on your view on interest rates and your needs/preference.