<![CDATA[Why SIBOR went up?]]>

starlight1968sg:
cool_hi:

[quote=\"starlight1968sg\"]scang has a valid pt.

I noticed when I was paying my hdb housing loan, I have been paying much on the interest and not much on the principle.

Ya agree..that was my observation too!! and got a shock when I realised..
& we quickly go and pay off everything..
felt so heartpain for those interest we paid in the 1st 10 years!
(& felt stupid also, for taking so long to realise!!) :slapshead:

Yes, I was in a similar situation. I felt stupid and heart-pain but vowed to payback asap.
I think the interest could be calculated on the outstanding amt ...[/quote]
to be honest, there is really no way you can get round that interest. it is an amortizing loan.

even if you try to pay off more, to frame it another way you are just adhoc taking a shorter loan term.

the way amortizing is structured is that you will always be paying more interest at the start. be it 10 years 15 years or 25 years.

if you realize you been paying alot after 15 years, the next 10 years is likely the more lax years.

many folks frame their hdb flats as buying it at 360k when essentially they should add 100k of interest to it, so it should be around 460k when the full loan ran finish.

also frame: what is the expected total return of your flat? rent yield + capital gain vs the purchase and interest cost?

]]>https://forum.kiasuparents.com/topic/81688/why-sibor-went-upRSS for NodeThu, 23 Apr 2026 06:03:20 GMTWed, 07 Oct 2015 23:33:07 GMT60<![CDATA[Reply to Why SIBOR went up? on Wed, 07 Oct 2015 12:38:45 GMT]]>

cool_hi:
starlight1968sg:

scang has a valid pt.

I noticed when I was paying my hdb housing loan, I have been paying much on the interest and not much on the principle.

Ya agree..that was my observation too!! and got a shock when I realised..
& we quickly go and pay off everything..
felt so heartpain for those interest we paid in the 1st 10 years!
(& felt stupid also, for taking so long to realise!!) :slapshead:

Yes, I was in a similar situation. I felt stupid and heart-pain but vowed to payback asap.
I think the interest could be calculated on the outstanding amt ...

]]>https://forum.kiasuparents.com/post/1590142https://forum.kiasuparents.com/post/1590142Wed, 07 Oct 2015 12:38:45 GMT<![CDATA[Reply to Why SIBOR went up? on Wed, 07 Oct 2015 12:36:50 GMT]]>

starlight1968sg:
scang has a valid pt.

I noticed when I was paying my hdb housing loan, I have been paying much on the interest and not much on the principle.
Ya agree..that was my observation too!! and got a shock when I realised..
& we quickly go and pay off everything..
felt so heartpain for those interest we paid in the 1st 10 years!
(& felt stupid also, for taking so long to realise!!) :slapshead:

]]>https://forum.kiasuparents.com/post/1590139https://forum.kiasuparents.com/post/1590139Wed, 07 Oct 2015 12:36:50 GMT<![CDATA[Reply to Why SIBOR went up? on Wed, 07 Oct 2015 12:01:41 GMT]]>scang has a valid pt.

I noticed when I was paying my hdb housing loan, I have been paying much on the interest and not much on the principle.

]]>https://forum.kiasuparents.com/post/1590117https://forum.kiasuparents.com/post/1590117Wed, 07 Oct 2015 12:01:41 GMT<![CDATA[Reply to Why SIBOR went up? on Wed, 07 Oct 2015 04:00:21 GMT]]>

scang:
do note that a new or refinance home loan goes more towards paying the interest in the initial period, and less towards paying the principal loan. It is only when you remain longer with the current bank, than the payment credited to the principal of your loan increases each year, while the proportion credited to the interest decreases.

I dont think you are totally correct to say that......interest is payable every month based on your principal amount.

Mth...\tInterest Rate (%)...Principal\t.....Instalment......Interest...Payment twds Principal...Principal end of mth
1---------2.000-----------$100,000.00----$452.32----- $166.67-----\t$285.65----------------$99,714.35
2---------2.600-----------$99,714.35------$481.67-----$216.05-----$265.62-----------------$99,448.73
3---------2.000-----------$99,448.73------$452.41-----$165.75-----$286.66-----------------$99,162.07
4---------2.000-----------$99,162.07------$452.41-----$165.27-----$287.14------------------$98,874.93
5---------2.000-----------$98,874.93------$452.41-----$164.79-----$287.62 -----------------$98,587.32
6---------2.000-----------$98,587.32------$452.41-----$164.31-----$288.10 -----------------$98,299.22


1) $100K x 2% divide 12 (mths) = $166.67
2) $99,714.35 x 2.6% divide 12 = $216.05

Above I showed in the event interest increased, what happens.... and when interest reduces back, what happens.

Of course based on above, you will see more paying towards principal at the end but that is BECAUSE your principal is reducing every month and hence the payment of interest is lower.

]]>https://forum.kiasuparents.com/post/1589850https://forum.kiasuparents.com/post/1589850Wed, 07 Oct 2015 04:00:21 GMT<![CDATA[Reply to Why SIBOR went up? on Tue, 29 Sep 2015 07:52:01 GMT]]>I think it will stop when it reach the level .

]]>https://forum.kiasuparents.com/post/1585241https://forum.kiasuparents.com/post/1585241Tue, 29 Sep 2015 07:52:01 GMT<![CDATA[Reply to Why SIBOR went up? on Tue, 29 Sep 2015 00:45:38 GMT]]>

pirated:
Why everyone rushing to buy condos ?


1. Herd instinct. Kiasu. Don't want to be left out
2. Always think that vacant unit will be held by others

all of us are mostly tertiary educated. we are suppose to be smart! good thoughts on us all being above the average.

]]>https://forum.kiasuparents.com/post/1584855https://forum.kiasuparents.com/post/1584855Tue, 29 Sep 2015 00:45:38 GMT<![CDATA[Reply to Why SIBOR went up? on Mon, 28 Sep 2015 05:52:32 GMT]]>Why everyone rushing to buy condos ?


1. Herd instinct. Kiasu. Don’t want to be left out
2. Always think that vacant unit will be held by others

]]>https://forum.kiasuparents.com/post/1584541https://forum.kiasuparents.com/post/1584541Mon, 28 Sep 2015 05:52:32 GMT<![CDATA[Reply to Why SIBOR went up? on Mon, 28 Sep 2015 05:25:03 GMT]]>

MrsKiasu:
kyith:

[quote=\"MrsKiasu\"]We have experienced with the 4% rate many years back ..the interest amount can be quite scary. So during the low interest period, we know that whatever we have 'got back' is just a bonus and that it is only temporary. We know that we just can't stop planning for it to come back. How about you..what do you think?


im more conservative, but i shouldn't be in this discussion much, since i do not own a condo and factor in the discussion.

i just felt that many of the newer buyers have been brought up in a period where their 'extensive' experience is within a period where the rates are all low. it creates a recency bias that things will be like that.

You have the privilege to experienced the norms. So you have sound planning there.

But 4% interest is interesting, considering gross rental yields for 3bd condos 1100sqft is 3%. those older buyers may get 4-5%. It definitely eats into some of the returns. the return will come from capital appreciation i guess.

Thanks for the sharing of your view, Kyith...I just saw scang's graph that there were 2 peaks at 8%..haha I am not prepared for that, frankly speaking 😂 . We had experienced over 10% interest rate for a prop loan in another country..after few years of paying, the principal owing still about the same. Coz we were young then we just pay and pay and when we have time to 'bother' about it, we got a shock. That was our lesson, when interest rate is high, if can, settle the loan or sell it.

Based on the little experience that I had, esp when preparing the figures for tax submission, when you put the net rental income for private and HDB side by side, you will find that the net return for private is actually quite miserable.[/quote]thanks for sharing. the 10% interest is interesting. that sounds like the USA. their idea of historically low interest is 3.5-4.5% haha!

but i think spikes are one thing, since its floating rate, if it stays above 8% for a long duration, you should be more worried. if its a 6 mths spike, i guess its ok?

condo returns cannot be miserable. if not why are everyone rushing to buy. thats my non-quantitative thoughts.

]]>https://forum.kiasuparents.com/post/1584532https://forum.kiasuparents.com/post/1584532Mon, 28 Sep 2015 05:25:03 GMT<![CDATA[Reply to Why SIBOR went up? on Mon, 28 Sep 2015 04:07:56 GMT]]>I experience the Interest rate going up from 1.45% to 4-5% within 2 short years from 2005 to 2007 for the floating rate.


so that experience teaches that in the event of rising interest rates, it is better to go for fixed rate, while the experience of 2008-2015 shows that in the event of falling interest rate, it is better to go for floating rate or Sibor rate.

do note that a new or refinance home loan goes more towards paying the interest in the initial period, and less towards paying the principal loan. It is only when you remain longer with the current bank, than the payment credited to the principal of your loan increases each year, while the proportion credited to the interest decreases.

]]>https://forum.kiasuparents.com/post/1584502https://forum.kiasuparents.com/post/1584502Mon, 28 Sep 2015 04:07:56 GMT<![CDATA[Reply to Why SIBOR went up? on Sun, 27 Sep 2015 11:45:07 GMT]]>

kyith:
MrsKiasu:

We have experienced with the 4% rate many years back ..the interest amount can be quite scary. So during the low interest period, we know that whatever we have 'got back' is just a bonus and that it is only temporary. We know that we just can't stop planning for it to come back. How about you..what do you think?


im more conservative, but i shouldn't be in this discussion much, since i do not own a condo and factor in the discussion.

i just felt that many of the newer buyers have been brought up in a period where their 'extensive' experience is within a period where the rates are all low. it creates a recency bias that things will be like that.

You have the privilege to experienced the norms. So you have sound planning there.

But 4% interest is interesting, considering gross rental yields for 3bd condos 1100sqft is 3%. those older buyers may get 4-5%. It definitely eats into some of the returns. the return will come from capital appreciation i guess.

Thanks for the sharing of your view, Kyith...I just saw scang's graph that there were 2 peaks at 8%..haha I am not prepared for that, frankly speaking 😂 . We had experienced over 10% interest rate for a prop loan in another country..after few years of paying, the principal owing still about the same. Coz we were young then we just pay and pay and when we have time to 'bother' about it, we got a shock. That was our lesson, when interest rate is high, if can, settle the loan or sell it.

Based on the little experience that I had, esp when preparing the figures for tax submission, when you put the net rental income for private and HDB side by side, you will find that the net return for private is actually quite miserable.

]]>https://forum.kiasuparents.com/post/1584188https://forum.kiasuparents.com/post/1584188Sun, 27 Sep 2015 11:45:07 GMT<![CDATA[Reply to Why SIBOR went up? on Sun, 27 Sep 2015 02:47:37 GMT]]>kyith

Thanks for sharing.
You are spot on to say there is no std ans and the decision differs from one to another since each situation is unique.

]]>https://forum.kiasuparents.com/post/1584026https://forum.kiasuparents.com/post/1584026Sun, 27 Sep 2015 02:47:37 GMT<![CDATA[Reply to Why SIBOR went up? on Sun, 27 Sep 2015 01:09:27 GMT]]>

MrsKiasu:
We have experienced with the 4% rate many years back ..the interest amount can be quite scary. So during the low interest period, we know that whatever we have 'got back' is just a bonus and that it is only temporary. We know that we just can't stop planning for it to come back. How about you..what do you think?

im more conservative, but i shouldn't be in this discussion much, since i do not own a condo and factor in the discussion.

i just felt that many of the newer buyers have been brought up in a period where their 'extensive' experience is within a period where the rates are all low. it creates a recency bias that things will be like that.

You have the privilege to experienced the norms. So you have sound planning there.

But 4% interest is interesting, considering gross rental yields for 3bd condos 1100sqft is 3%. those older buyers may get 4-5%. It definitely eats into some of the returns. the return will come from capital appreciation i guess.

]]>https://forum.kiasuparents.com/post/1583989https://forum.kiasuparents.com/post/1583989Sun, 27 Sep 2015 01:09:27 GMT<![CDATA[Reply to Why SIBOR went up? on Sun, 27 Sep 2015 01:03:49 GMT]]>

starlight1968sg:
kyith:

just curious.how much margin of safety does most who buy investment property here have if the rates stay above 2% for an extended period?


Would it be good to pay off using cash instead of servicing the loan, although this will greatly reduce the amt of cash held in hand?


hi starlight, i am not going to throw you the standard answer. there are always evaluations based on competency of the planner.

If you lack competency and the motherhood answer, for conservative reasons, it is better to have a larger down payment or pay it down.

The answer for most lies in the middle.

1) your excess cash flow is usually not meant to be to tide through one risk event such a rise in interest rates, but also in other emergency events. as such i tend to favor a more calculated approach. suppose you can borrow at 1.2% interest, plan the cash flow for a 3% interest or 4%. set aside those amount you would pay extra in your bank account. if the time comes you can start drawing down from this 'virtual envelope' earmarked for additional interest payment. If it goes down again, add on to this 'virtual envelope'. this would give you adequate time to think whether its more attractive to refinance to fixed or something

2) if you pay more, then one spouse lost the job (touchwood), then you be extra squeezed. for this reason it is better to plan with the 2 cash flow income stream of the spouses in mind for this, in addition to other income stream from wealth assets. some folks work in civil service, rock solid employment. in that case that their job is a 'bond' instead of an 'equity' they can afford to pay more, or risk more loans. for the folks in 'equity', perhaps its better to prudently accumulate like what is recommended in (1) and then refinance or something.

3) having wealth assets change alot if you have a fully paid up flat, a portfolio of dividend stocks that provides a cash flow to supplement the payment. with all things it is the nature of the cash flow

i believe as long as you have purchase at not a high valuation, not pushing your debt to asset for your overall portfolio to the extreme, you should be ok. the nature of the jobs and cash flow income matters alot in the decisions.

]]>https://forum.kiasuparents.com/post/1583986https://forum.kiasuparents.com/post/1583986Sun, 27 Sep 2015 01:03:49 GMT<![CDATA[Reply to Why SIBOR went up? on Sat, 26 Sep 2015 05:17:56 GMT]]>We have experienced with the 4% rate many years back …the interest amount can be quite scary. So during the low interest period, we know that whatever we have ‘got back’ is just a bonus and that it is only temporary. We know that we just can’t stop planning for it to come back. How about you…what do you think?

]]>https://forum.kiasuparents.com/post/1583749https://forum.kiasuparents.com/post/1583749Sat, 26 Sep 2015 05:17:56 GMT<![CDATA[Reply to Why SIBOR went up? on Sat, 26 Sep 2015 05:08:00 GMT]]>

kyith:
just curious.how much margin of safety does most who buy investment property here have if the rates stay above 2% for an extended period?

Would it be good to pay off using cash instead of servicing the loan, although this will greatly reduce the amt of cash held in hand?

]]>https://forum.kiasuparents.com/post/1583748https://forum.kiasuparents.com/post/1583748Sat, 26 Sep 2015 05:08:00 GMT<![CDATA[Reply to Why SIBOR went up? on Sat, 26 Sep 2015 05:01:48 GMT]]>its good to be prepared. kudos!

]]>https://forum.kiasuparents.com/post/1583746https://forum.kiasuparents.com/post/1583746Sat, 26 Sep 2015 05:01:48 GMT<![CDATA[Reply to Why SIBOR went up? on Sat, 26 Sep 2015 02:09:46 GMT]]>

MrsKiasu:
kyith:

just curious.how much margin of safety does most who buy investment property here have if the rates stay above 2% for an extended period?


For us , we are ready for 4% interest in time to come..

Same here.. must always be ready for higher interest rates..

]]>https://forum.kiasuparents.com/post/1583700https://forum.kiasuparents.com/post/1583700Sat, 26 Sep 2015 02:09:46 GMT<![CDATA[Reply to Why SIBOR went up? on Sat, 26 Sep 2015 01:47:01 GMT]]>

kyith:
just curious.how much margin of safety does most who buy investment property here have if the rates stay above 2% for an extended period?

For us , we are ready for 4% interest in time to come..

]]>https://forum.kiasuparents.com/post/1583687https://forum.kiasuparents.com/post/1583687Sat, 26 Sep 2015 01:47:01 GMT<![CDATA[Reply to Why SIBOR went up? on Sat, 26 Sep 2015 01:18:54 GMT]]>just curious.how much margin of safety does most who buy investment property here have if the rates stay above 2% for an extended period?

]]>https://forum.kiasuparents.com/post/1583684https://forum.kiasuparents.com/post/1583684Sat, 26 Sep 2015 01:18:54 GMT<![CDATA[Reply to Why SIBOR went up? on Thu, 17 Sep 2015 08:48:09 GMT]]>

pirated:
Fixed rate for first three years tend to be higher than sibor+x, because banks are kiasu and factor in imagined rate increase. At the end no savings compared with sibor+x for the first few years. After that board rate kick in no diff or higher than sibor+x again ..... chasing its own tail


Go study the rate pattern

Unlikely fixed rate can be lower than sibor+x anytime

Do note that sibor peg interest rate for housing loan was only introduced around 2008/09.
Previously, there was only bank floating rate and fixed rate.

Do you have any analysis done or have any statistics to suggest otherwise?

My personal experience on housing loan concur with data and analysis done by a certain portal as summarised below.

http://www.mortgagewise.sg/wp-content/uploads/2015/04/SIBOR-VS-FHR-HISTORICAL-TRENDING.png\">

It takes average of only 3-4 years for sibor to climb from its low base to next high in each of the 3 distinct periods of economic expansion over the past 26 years.

Over a 28-period is that in periods of rising sibor rates (eg. 1987-1990, 1993-1994, 1996-1998, 2004-2006) FD rates tend to go up less or trade sideways when compared to sibor.
It is less volatile as evident from the narrower band of swings from top to bottom in each cycle as opposed to sibor.

When sibor is on a downtrend (eg.1990-1992, 1994-1995, 1998-1999, 2001-2003, 2006-2011) FD rates becomes less elastic and borrower is better off on sibor pegs where their borrowing costs come down more and quicker.

]]>https://forum.kiasuparents.com/post/1579602https://forum.kiasuparents.com/post/1579602Thu, 17 Sep 2015 08:48:09 GMT<![CDATA[Reply to Why SIBOR went up? on Thu, 17 Sep 2015 08:44:19 GMT]]>

zbear:
pirated:

Yeah, some uses money to grow money. Some just fully pay up the house and see the value drop



But there is no guarantee that the money used will grow money.

If house is fully paid up, one less debt to clear aka one less financial burden.

Depends on each person's FQ and opportunities. Some see crisis some see opportunities

]]>https://forum.kiasuparents.com/post/1579601https://forum.kiasuparents.com/post/1579601Thu, 17 Sep 2015 08:44:19 GMT<![CDATA[Reply to Why SIBOR went up? on Thu, 17 Sep 2015 08:41:12 GMT]]>

pirated:
Yeah, some uses money to grow money. Some just fully pay up the house and see the value drop


But there is no guarantee that the money used will grow money.

If house is fully paid up, one less debt to clear aka one less financial burden.

]]>https://forum.kiasuparents.com/post/1579598https://forum.kiasuparents.com/post/1579598Thu, 17 Sep 2015 08:41:12 GMT<![CDATA[Reply to Why SIBOR went up? on Thu, 17 Sep 2015 08:09:52 GMT]]>

starlight1968sg:
pirated:

By having housing loan and able to deploy the cash to higher returns, why not ?


The prob is not all are able to deploy the cash to earn a higher return.

Yeah, some uses money to grow money. Some just fully pay up the house and see the value drop

]]>https://forum.kiasuparents.com/post/1579586https://forum.kiasuparents.com/post/1579586Thu, 17 Sep 2015 08:09:52 GMT