Home loan rate rises

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#1
Interest rates starting to rise on the back of rising US10yr Yields. Further downturn for property sector? Good for banks?

https://sg.finance.yahoo.com/news/dbs-fh...39446.html

DBS FHR-18 Fixed Home Rate Rises on 1st Feb 2018
DBS FHR-18 fixed home rate to be raised

It’s official, DBS FHR is up. DBS raised their Fixed Home Rate FHR-18 rom 0.6% to 0.8% on 1st Feb 2018. Fixed Home Rate is pegged to fixed deposit rates that DBS offers to their depositors. FHR-18 stands for Fixed Home Rate pegged to 18-month fixed deposit. Home owners who were on FHR-18 + Spread should have received letters by now to inform them that their home loan rates will increase by 0.2% in late January or February 2018.
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#2
Bro Blue. I am doing some funny thinkings here. In fact I think rising interest rates is better for property in short term. People will be forced to start purchasing their house earlier in view of the rising interest rates. Lock down the good rates first. The rising interest rates will force money to go back to banks but while they are well capitalised, it may be difficult to loan out to good businesses who have saved up enough money to fund their own expenses. But if property business is booming then banks will start finding developers to take their money. Worse case scenario if property market go south... we still have bullets to withdraw absd and boost back sentiments.

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#3
Increase by 0.2% to 0.8%. No sweat to them. Wait till 2% plus then say.
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#4
The housing market is again in a strange place right now. There is somewhat strong demand for new private homes BUT rental market is in terrible shape right now.

I just visited a relatively new development, studio in the city next to MRT, prime AAA CBD location. Rental only $3K.
Not enough to cover anything. Bear in mind holding cost = Cost of capital + Interest cost +maintenance + property tax(Non owner occupied) and we have not even started talking about depreciation for the leasehold. It is completely irrational. Goes to show that there is little else to invest in for better yield.

And I visited another commercial retail property in the east(those pigeon hole type), first floor facing the road completely empty.
Speaking to some tenants, a first floor pigeon hole can be rented as low as $800. Bear in mind maintenance is already a few hundred dollars.

Then there is one property up north, retail also. facing main road, completely empty for about 1.5-2 years now. The only bright spot in retail property is probably the better locations of HDB shops due to higher population density and ready catchment. Tenants for residential, retail & industrial units are in very short supply. Too many units chasing after too few tenants. Excellent time to be a tenant.
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#5
There is demand because everyone thinks housing prices will continue to appreciate and simply because our foolish love for properties.

It is only when the masses start to realize that either i) the yield on property are not as great or ii) that property prices fall drastically until they get "margin called"; will we then see a reversion to the mean. Or in some cases, the loan repayment of un-rented retail units are eating into the earned income of individuals until it becomes too painful. The rising interest rates is going to be painful wake up call for local property owners when the cost of debt funding significantly exceeds that of their property yield.

As a 20+ year old individual with a limited amount of capital, I shall just be an observer watching the comedy sketch written by my older peers of this island. Will this end in tragedy or will the government save everyone.
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#6
Just curious, let's use a data point in 2008 GFC, how many property owners in percent terms affected ? How many are younger gen owner of HDB then that were were forced to sell. Then we know for sure younger generation needs to avoid or not.

Cory

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#7
(04-02-2018, 07:26 PM)Big Toe Wrote: The housing market is again in a strange place right now. There is somewhat strong demand for new private homes BUT rental market is in terrible shape right now.

I just visited a relatively new development, studio in the city next to MRT, prime AAA CBD location. Rental only $3K.
Not enough to cover anything. Bear in mind holding cost = Cost of capital + Interest cost +maintenance + property tax(Non owner occupied) and we have not even started talking about depreciation for the leasehold. It is completely irrational. Goes to show that there is little else to invest in for better yield.

And I visited another commercial retail property in the east(those pigeon hole type), first floor facing the road completely empty.
Speaking to some tenants, a first floor pigeon hole can be rented as low as $800. Bear in mind maintenance is already a few hundred dollars.

Then there is one property up north, retail also. facing main road, completely empty for about 1.5-2 years now. The only bright spot in retail property is probably the better locations of HDB shops due to higher population density and ready catchment. Tenants for residential, retail & industrial units are in very short supply. Too many units chasing after too few tenants. Excellent time to be a tenant.

From 2 years ago I have had to lower rentals 30% in paterson road and robertson quay, but my feeling is things have stabilised in the past year, tenants have renewed at same rate and locked in 2 years instead of previous 1 year.
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#8
Not only home loan rate has rises, the land bid price of an upcoming executive condominium in Punggol area (Sumang walk) has also increased. The expected breakeven price for this particular EC could be even higher than some of the private condo in Sengkang area.

http://www.straitstimes.com/business/pro...-ec-record
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