COE and Car Prices

Quote:2. The statistics gathered is showing a credit bubble in the wrong social class, ie. the middle and lower income group is having a higher proportional of debt as compared from the upper income class.

Source?

> The government is expecting interest rate rise and is worried about the impact of it onto those
> income groups that could not afford yet are accumulating.

> Interest rate may be going up sooner than later.
> Check out the FDs interest rate at various banks or for those serviced with RMs

1. Gold prices are correcting because of this reason.

2. That is probably the reasons why REIT managers are refinancing or so actively doing placements!!! If interest rate goes up, their yield will drop and the share place will correct...
When the banks or the listed companies give u something, they are telling me something is coming ahead...

Make sense? If not, let me know...

Do you expect MAS to raise interest rate ahead of U.S?

(27-02-2013, 02:19 PM)Contrarian Wrote: > The government is expecting interest rate rise and is worried about the impact of it onto those
> income groups that could not afford yet are accumulating.

> Interest rate may be going up sooner than later.
> Check out the FDs interest rate at various banks or for those serviced with RMs

1. Gold prices are correcting because of this reason.

2. That is probably the reasons why REIT managers are refinancing or so actively doing placements!!! If interest rate goes up, their yield will drop and the share place will correct...
When the banks or the listed companies give u something, they are telling me something is coming ahead...

Make sense? If not, let me know...

Quote:I am supportive of the measures as this means people will be more financially prudent when it comes to purchasing a depreciating asset.

I don't think people suddenly become financially prudent. Rather these group of people suddenly have no means of not to be financially prudent. i believe you are financially prudent or not in the first place regardless of the availability or unavailability of the avenue to do so (Control by the PAPYS).

i believe come nearer to 2015/16 the PAPYS will make it even sweeter for people with average means who want to own a car.
No matter what some people will win, some people will lose. It's still O. K. But if majority lose, Woe to the PAPYS.
The current tweaking of COE is even more favourable to the Elites with a lot money; though they have to pay a "higher penalty" for a higher price car. This also means the majority of people is even further from the smell of a higher-price car.
Wait for 2015/16. Hee! Hee!

I totally agree with you on this: <come 2015/16, make it even sweeter for people>
Yes, next year and the following year, esp prior election time, expect many things to be sweet, and sweeter...
My guess is as good as yours - Ultimate aim: to gain more votes.

(27-02-2013, 03:21 PM)Temperament Wrote: i believe come nearer to 2015/16 the PAPYS will make it even sweeter for people with average means ...

(27-02-2013, 03:21 PM)Temperament Wrote: I don't think people suddenly become financially prudent. Rather these group of people suddenly have no means of not to be financially prudent.

The current tweaking of COE is even more favourable to the Elites with a lot money;

It is true, for those who do not know the value of money, sometimes making it harder for them to spend is the next best alternative. It is also true that this intervention has a lesser impact on the rich than the poor, but we must ask ourselves why the rich is rich while the poor is poor? In most instances I believe the rich are rich because of their doings and their attitude towards money and money management. Look at the youngsters who after only working for a few years bought a car to “upgrade” themselves? This is despite the exorbitant COE prices. Is this necessary? Can they be rich one day? It is okay to dream of owning a car (I always dream of owning a luxurious European car one day )), it is okay to make this as one of the targets in life, but there must be priority!

I support the govt intervention, and in fact I think it is a bit overdue. My little comments on the restriction of loan tenure to five years, I think this is intervening in the free market. Banks and financial institutions should be allowed to access the credit risks when they extend the loan to borrowers. In one swift move, the policy “penalize” everyone at one go.

The only way MAS will raise interest rate AHEAD of US, is when property prices continue to head north without control. This will be closer to intervening in free market, doing something unpredecented.

Otherwise, MAS will wait for US Fed to do the job...

(27-02-2013, 02:49 PM)2V. Wrote: Do you expect MAS to raise interest rate ahead of U.S?

(27-02-2013, 02:19 PM)Contrarian Wrote: > The government is expecting interest rate rise and is worried about the impact of it onto those
> income groups that could not afford yet are accumulating.

> Interest rate may be going up sooner than later.
> Check out the FDs interest rate at various banks or for those serviced with RMs

1. Gold prices are correcting because of this reason.

2. That is probably the reasons why REIT managers are refinancing or so actively doing placements!!! If interest rate goes up, their yield will drop and the share place will correct...
When the banks or the listed companies give u something, they are telling me something is coming ahead...

Make sense? If not, let me know...

(27-02-2013, 01:21 PM)arthur Wrote: I fully agree with this statement too.

In my personal opionion to read between the lines of the recent measures, couple of things might be able to infer from the government stance.

1. To pacify the middle and lower income group that the government is able to look after their welfare by doing a "Robin Hood" tax measures.

2. The statistics gathered is showing a credit bubble in the wrong social class, ie. the middle and lower income group is having a higher proportional of debt as compared from the upper income class.
The statistics we can gather from MAS on bank debts loans are an average figure, lumping all income groups together. It doesn't show segregated categories (eg. top 20%, bottom 20%) with their corresponding debt level. It would be good if someone could prove me wrong on this though.

3. The government is expecting interest rate rise and is worried about the impact of it onto those income groups that could not afford yet are accumulating.
Contrary to what property agents and people with vested interests are saying, interest rate may be going up sooner than later.
Check out the FDs interest rate at various banks or for those serviced with RMs, check out the interest rate on liquid accounts. It seems to be inching upwards.

(27-02-2013, 01:30 PM)yeokiwi Wrote:

Quote:2. The statistics gathered is showing a credit bubble in the wrong social class, ie. the middle and lower income group is having a higher proportional of debt as compared from the upper income class.

Source?

I already stated its my personal opinion and its my inference.
Please read properly.

The Straits Times
www.straitstimes.com
Published on Feb 28, 2013
Car cooling measures: Will you still buy? - THE FIRST-TIMER
Dream wheels now out of reach
The Government announced on Monday that it will pile on additional tiers of taxes on luxury cars and regulate car loans. The Straits Times looks at the impact on three classes of buyers

By Jermyn Chow

FOR the last four years since he started work, bank officer Zack Kua has been saving up for his dream car - a second-hand BMW 3 series.

But the 28-year-old can no longer afford the car - which costs more than $80,000 for a six-year-old model - in the wake of the new car loan curbs that the Government has imposed.

Customers now have to stump up more cash for upfront payments because the loan is limited to between 50 per cent and 60 per cent of the car's purchase price.

"It's frustrating that I've been priced out of the car market despite working hard to save up for a car that I've always wanted," said Mr Kua, who takes the train to work or drives the family car on weekends.

He and many other first-time car buyers are among the hardest hit by the additional taxes rolled out on luxury cars and tightened car loans. They will also have to contend with bigger monthly instalments because the maximum loan period has been shortened from 10 to five years.

For Mr Kua, who earns about $4,000 a month, acquiring a second-hand BMW 3 series under the new rules will mean a $40,000 cash outlay.

This, he said, will be a burden because he has other financial commitments - including a five-room flat in Sengkang that he is getting with his girlfriend.

Before the new loan curbs kicked in on Tuesday, he would have needed to fork out only $10,000 or so in cash, with a loan covering 80 per cent of the car's purchase price.

Mr Kua now has two choices - defer his purchase, or settle for a cheaper set of wheels like the Toyota Corolla or Hyundai Getz.

"Even with smaller cars, I still have to part with quite a huge sum of money, so I might just have to ditch the car dream," he said.

Also thinking twice about buying a first car are marketing executive Teo Huimin and her husband.

They were considering a second-hand Peugeot 307 or a used Hyundai i30 that cost $43,000 and $52,000 respectively, and were going to make their final decision after Chinese New Year, believing that prices might go down.

"The announcement took us by surprise, but it is making us rethink our priorities - whether we want a car or more cash in hand," said Ms Teo, 30, who now relies on public transport or her father- in-law's car.

The couple are also preparing to renovate their new flat which they will move into by the year end.

"At the end of the day, it's not just about the convenience of owning a car. It's whether I can afford it comfortably without being enslaved to a car loan," she said.

jermync@sph.com.sg

Can potential car buyers loan the 40% downpayment from licensed money lenders such as MaxiCash?