(05-06-2012, 08:42 AM)Thriftville Wrote: Hi buddies,
Will HDB drop the valuation price, if the economy is bad? If valuation drop, will it affect the bank's balance sheet? Will there be margin call?
Hope to hear your views!
Thriftville,
1) Not so sure what is your major concern… ((looks like some of us are getting ready for the downturn?)
2) Unless you buy bank shares, if not why bother about bank’s balance sheet. If market dips, we, as consumers, are more concern with our own affairs.
3) Yes, if stock market tank too deeply, those using margin will be badly affected.
Anyway, my idle thoughts are: (not necessary correct, pls share your experience, and experts pls help to advise)
HDB loan is different from private property loan.
For HDB loan:
I think this is a bit tricky.
In the very past, we buy flats using only HDB loan.
Since quite a few years back, we can also opt for commercial loan to pay for HDB flat.
The question now is: if HDB price goes down, how will commercial bank react???
For private property:
If price drops, and you are able to continue to service the loan instalment, they will not bother you.
If you had pledge your property for some mortgage loan or draw an OD line, yes, they may recall the loan amount or ask you to top up some money. (Remember the saying: the bank will lend you an umbrella if it is a sunny day; but will withdraw the umbrella when it rains? Heartless!
If you have some collateral loan in exchange for some margin a/c, and if the market dips, banks are quite likely to react.
Definition of collateral loan:
A collateral loan is a loan secured by some asset you own. You promise to hand the asset over to the lender if you cannot repay the loan as agreed. By using a collateral loan, the lender takes less risk, and it may be easier for you to get funding. Make sure you know the essentials of collateral loans before you use one. Collateral loans are used when the lender wants some assurance that they won’t lose all their money. If you pledge an asset as collateral, they can take the asset, sell it, and get their money back.
HDB flat cannot be used as collateral.