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Why many Sinkies will die if interest rate goes up....
- Thread starter BuiKia
- Start date
I believe the word is 'chump'.
Sure affected. Now the COV is not so high liao.
The only issue is how the dumb valuers value the HDB flats. Do you know why the valuations keep going up ?
These cheebye valuers only look at last traded price (past valuation + COV). So, every quarter if last traded price goes up, valuation also go up.
$8 CowBeh says BTO prices have been delinked from resale prices, which i really don't know how true is it. don't see a drastic difference in price. Anyway, it's a simple supply and demand matter, more people buy, price go up, nobody want to buy, price go down. Singapore bring in 2 million immigrants and hand out citizenships and PRs, price will go up. If interest rate goes up, there will be two plausible scenarios, one, the inherent demand is still so strong that it will prop up the market for awhile, or two, people are getting stuck with loans that have now become alot more expensive, confidence drops and the property market bubble will burst.
Thing is government wants to stabilise the housing market, but the measures so far, have not much effect. One cooling measure was the Additional Buyer Stamp Duty which hit speculators hard, and made many investors look for alternative modes of investment. But this largely affects the private property market, which has seen somewhat of a slowdown, and not HDB so I will not go into it. The majority of buyers are houseowners intending to stay at the house, which shows a clear demand for HDB flats that have not been met for quite a few years, due to large increase in working population. Maybe the then MND MBT was sleeping too often in parliament? It does show a remarkable lack of planning and foresight for our property market to be in this state. Anyway, we are now stuck in the midst of a bubble, and it cannot sustain forever, as the property market goes in a cyclical effect. The government objective is to prevent speculators from hotting up the market, building overconfidence in property that has value that what it is worth, and to encourage financial prudence (abit too late though) to prevent too many people jumping from HDBs and swimming at Bedok Reservoir, when push comes to shove and the shit hits the fan.
How will HDB prices be affected? The effect will likely be miniscule. Spending 60% of your income on all your loans is a large amount. Imagine you earn $5000, your maximum monthly loan cap is $3000. It means a huge sum can be loaned, especially in these days of record low interest rates, and the typical housing loan will be spread over 30 years. The most common loans are car and housing. With the recent car cooling measure already implemented, I do not forsee this to have much impact on those with both car and housing loans. It's highly possible MAS may lower it to 50% of total income if prices continue to go up. Anyway, like many recent policies, I feel that this policy has come too late to make a real impact, this kind of measure is long overdue, should have been implement in 2011. Two years later, and after many people bought their houses, then come out with this measure. Seriously, I feel those who bought over the past couple of years are overpaying, but oh well, willing buyer, willing seller.
$1800 is not the interest but the monthly instalment payment the flat buyer must pay. $1800 is inclusive of principal + interest. the interest could be higher than the principal amount at the first few years of the 30yr loan.
even using the hdb loan interest of 2.6%, the monthly repayment will be around $1,563.00 with the first month interest charge of $845. the interest is 54% of the instalment. so pap is giving a rope for singaporeans to hang themselves with a loan repayment period of 30yrs. what MND aka $8 cow didnt tell ppl was that can only use cpf for loan servicing up to the valuation of the flat. ie, flat $390k mean cpf can only use up to $390K, so the interest of $170k will have to be pay by cash, which mean the last 8-9yrs the flat owner have to pay the monthly $1563 instalment in cash.
i been warning my younger cousins but none listen. i sincerely hope they be ok when they reach 50yo as i myself already fully paid up my hdb lease.
heard from friend who a hdb reale property agent that the COV had collapse. now $5000cov also consider expensive. the buyers are not willing to pay the COV plus high valuation. most willing to wait for the cheaper direct purchase form hdb. the number of resale transactions has fallen drastically.
Many property agent has changed job and the rest are having coffee breaks by the hours.
Private is not dropping as it is sustained by rental for the time being so owner no hurry to sell.
Private is not dropping as it is sustained by rental for the time being so owner no hurry to sell.
demand had drop off for hdb resale market. all that needed for hdb resale price to fall is the interest rate.
if bank interest rate revised upward, then HDB loan rate also go up. if i not mistaken, hdb loan interest rate was ard 4% in the 80s. as for cpf rate, i really dunno.
SG household debt is more like 279% to GDP. our public debt is also sky high at 100% to gdp but we are rich because we run budget surplus every year that goes to temasek, unlike USA/Europe etc
and of course don't forget the several years of 5% inflation that has affected every Singaporean. MAS does not use interest rates they use currency bands - resulting in a failed result of 5% inflation.
and of course don't forget the several years of 5% inflation that has affected every Singaporean. MAS does not use interest rates they use currency bands - resulting in a failed result of 5% inflation.
In May 2013, US 10-year Treasuries was at 1.65%.
Right now, it is at 2.47 %. Bernanke could be gone soon. A new moderate Fed chief may not want to have such a big book in the central bank. If this is the case, the FED may be less supportive of aggressive quantitative easing. Interest rate may go up further, even possibly to 3.5 - 4%.
I am really looking forward to this as the fixed deposit rates will be more attractive
Nabez, too late again, the other time also post after laksa................ :o
I was going to post in this thread "AhGuan will be very pleased."
which means "dumbo", as opposed to "chum" which means "friend"............... :o
actually, it 0.1%, cpf rate is 2.5% now while hdb is 2.6%.
cpf OA rate up or not will not hurt pap pocket one little bit at all. what is in the OA is just a random figure that all singaporean cannot touch in their life time. even really can withdraw in the future, all they have to do was just print a bit more notes @ MAS.
and by the way, in the event u sell the flat, you have to repay the 2.5% compounded interest + principal back to your cpf OA. so how rise in OA rate will affect pap at all? hahaha..... they got that covered long ago.
yes, aware of this interest thing. this is the biggest joke, sinkees paying interest for using their very own money to buy hdb pigeonhole. and sinkees are ok with it.:*::*::*:
well, u can pay hdb loan by giroing your cash balance from your bank account. which to me seems the best way for ppl who dont invest and keep large cash balance in bank. pay by cash since bank saving interest so low and let cpf OA balance earn 2.5%. when sell flat, all profit proceed belong to themselves while feel rich by looking at their monthly cpf statement. hehe...
A Singaporean in Australia actually bought an "Investment property" for his son to live in. Actually, the private arrangement is that it is his son's property and the son is paying the "mortgage" and the loan interest is tax-deductible, and being a new house, there is good depreciation.
we still save a lot more money than ang mohs. so if by interest rates , you mean our savings and fixed deposit rate also increase, THEN MOST of us will have more money when we retire. unlike right now when our savings and most assets will keep losing money/value due to rapid inflation and low interest rates that banks and gahmen give us...
i don't care if some semi-rich "joe the plumber" ,guy who earns 100K a year, lose money because he love borrowing to speculate property market!!! fuck u la, OP!!! you voted for NSP rite. jerk off.
i don't care if some semi-rich "joe the plumber" ,guy who earns 100K a year, lose money because he love borrowing to speculate property market!!! fuck u la, OP!!! you voted for NSP rite. jerk off.
The youngsters with the talent and ability will have migrated to better pastures while those who don't will be in slums serving the new citizens that the chenghu have been importing.
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