What's your View on the Bank Mortgage Rate?

Most my clients have asked me on my opinions on the future Mortgage Rates.  Many a time, I replied, how low do you think the Mortgage Rate can go, at most down 0.37% to 0%.

As at 24 Jan 2013, 3 mth Sibor is 0.37667%, the lowest in the whole year of 2012 but do take note that Bank Mortgage Fixed interest rate and the spread (ie 3mth Sibor + 0.85% ) has been hiking since last year.

What does it implies? It’s up to you to analyse.

Most of the seasoned property investor has gone through the below mention few cycle and learn their lesson from there.

4th Quarter of 2000, during Dot-com Bubble, 3mth Sibor is more than 2.5% 
3rd Quarter of 2001, during  S11 Attack,   3mth Sibor is more than 2%,
1st quarter of 2004, during SARS Period,  3mth Sibor  is more than 2% and thereafter peak up to more than 4%,
1st Quarter of 2008, during the Property Bloom period, 3 mth Sibor is more than 3.5%

I have check with a few seasoned property investors on their views on the Mortgage rates in the next few year and most of them think that Sibor will hover around the current rate till end of 2015 but they are cautious and prepared for the hike.

Most importantly is, are you prepared or are you still planning to let your rental merely cover your monthly installment?

Most of the Mortgage Broker will want you to take up no lock in Sibor /SOR package, so that repeat business will come fast when the interest rate hike.

But do you really think that it is worthwhile for you to take that package especially when most bank doesn't give legal subsidy nowadays?

Recently, I got my banker to deviate a Sibor package for my client after he “hear say” from his friend that the rates will stay as it is till end 2015.

                  Deviated Sibor Rate                                          Current Fixed Rate
   1st year: 3mth Sibor + 0.80% = 1.17667%                  1st  year: 1.15%(fixed)
   2nd year: 3mth Sibor + 0.80% = 1.17667%                 2nd year: 1.35%(fixed)
   3rd year: 3mth Sibor + 0.80% = 1.17667%                  3rd year 1.45% (fixed)

My question to you is, are you willing to take the risk.

Based on average of  3 years ,the difference of deviated Sibor rates as compared to the Best fixed rate is just 0.140% apart , if Sibor rate stay at 0.37667% throughout the three year.
Ask yourself this question, do you think that Sibor will stay as it is, till 3 years later?

What are your views on the Mortgage Rate? Will it hike , stay as it is or you think that it will still go down?

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If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg