Top HDB Projects In Singapore

The shocking news of HDB Singapore flats fetching a record high of $1 million dollars has left many Singaporeans in astonishment. These flats are mostly maisonette or executive apartments located near a MRT station. However, newer HDB developments with the current standard floor area of 110sqm for a 5-room flat have not yet crossed the million dollar mark. In my opinion, million dollar HDB flats will become more common when flats in the following top HDB projects enter the resale market.

The Pinnacle @ Duxton

Located just minutes away from the Central Business District, The Pinnacle@Duxton is one of the most highly sought after HDB projects in Singapore. On 29 May 2004, HDB released 528 units under phase 1 of its Build-To-Order system and units quickly became oversubscribed.

This HDB Project was officially completed in December 2009 and a keys handover ceremony was held on 13 Dec 2009. The Pinnacle@Duxton is expected to reach the million-dollar mark as units will be eligible to be sold in the resale market after the five year Minimum Occupation Period (MOP) is fulfilled by 2014/2015.

Source : http://en.wikipedia.org/wiki/File:Pinnacle@Duxton,_Singapore_-_20100101.jpg

Tiong Bahru View

Situated right next to Tiong Bahru MRT and Tiong Bahru Mall, it is quite a surprise that this piece of land is not given to private developers instead. Just a month ago, the piece of land situated next to Tiong Bahru View was sold to Keppel Land for $550million or $1,163 per sqft, the highest price per square foot ever tendered for a purely residential site in the Government Land Sales (GLS) programme. In fact, I feel that Tiong Bahru View has a slightly better location than the GLS land parcel due to its closer proximity to the MRT.

The estimated completion date of this project is 31 Dec 2015, meaning that these flats will enter the resale market in 2020 after the 5 year minimum occupational period is fulfilled. With surrounding resale HDB flats selling for more than $900k, it will be a huge surprise if good units in Tiong Bahru View do not cross the $1million mark in 2020.

Mixed Development at Clementi Town Centre

The development, completed in November 2011, is a 40-storey mixed development. The residential component of the mixed development consists of 388 units of new HDB flats. They were built under the HDB’s Selective Enbloc Redevelopment Scheme (SERS) programme primarily to house home owners from within the same township. Located just above the Clementi Town Centre and less than a minute walk to the MRT and bus interchange, this development is set to be one of the top HDB projects in Singapore. 5 room resale flats located 300 metres from the MRT are already selling in the range of $800k-$900k. 

Source: http://www.hdb.gov.sg/fi10/fi10297p.nsf/ImageView/CORPORATE_PR_15052012_Pic1/$file/IMG_8645.jpg

Moreover, Clementi Town Centre is just one stop away from the upcoming Jurong Lake District. With plans to transform Jurong into the next commercial hub with a good mix of shopping malls, office buildings, hotels, hospitals and residential buildings, the area will be transformed to a unique destination for business and leisure by 2025.  Property prices in Clementi will certainly increase as a result of the spillover effect from the revamped Jurong Lake District. In addition, when these flats enter the resale market in 2016 after the 5 year minimum occupational period is fulfilled, property developments that are currently under construction such as Trivelis (DBSS), Clementi Ridges (BTO), Trilinq (Condominium) and SERS development right beside Clementi Mall, will all be completed. 

As more HDB projects in prime areas start to enter the resale market in the next few years, we will definitely see more million dollar HDB flats being transacted. The expansion of our MRT network will also drive up property prices across the island. Million dollar HDB flats will soon be the norm. What do you think?

How Does Different Tenures of SIBOR and SOR Affect Borrowers?

The following is a guest post by Property Buyer

As Singapore has been largely dependent on importation in maintaining a small and open economy, it has literally adopted a policy for the exchange rate that significantly affects import-based inflation. MAS or Monetary Authority of Singapore is responsible for regulating and managing the Singapore dollar valuation against its main trading partners and their related currencies. Based on this perspective, we can say that the world money market actually determines the rise and fall of the interest rate in Singapore. The interest rate fluctuates as a result of this undisclosed band between the MAS and its trading partners. This is relevant to how the US Dollar became a main component in the basket of currency between trading countries. To explain the strength of the Singapore Dollar, we can refer to the way the US Dollar works within the basket of currency. This simply explains how currencies between trading partners work. 

Explaining the framework of SIBOR or Singapore Inter-bank Offered Rate

When banks or financial institutions lend to each other, they usually refer to an interest rate to base their inter-borrowings. They use SIBOR as their inter-bank rate or inter-borrowing rate. The rate is actually set by the Association of Banks in Singapore. It is being announced daily at the start of the trading day to the public and mainstream media. For your information, SIBOR works similarly to LIBOR or London Interbank Offered Rate. Most home loan rates in Singapore use the SIBOR rate.

In Singapore, SIBOR are available in 1 month, 3 months, 6 months, and 12 months tenure. Usually the longer the tenure of SIBOR , the higher would be its rate.

Understanding the SOR or Singapore Swap Offer Rate

The expected forward exchange rate of the USand Singaporedollars is the SOR. The SOR is also used as the lending cost, where upon maturity, the SOR is being used as the rate of the Forex conversion with no bid and spread from the US to Singaporedollar. The banks love to use the SOR because they save more by using this rate. However, it demonstrates more volatility than SIBOR. The Association of Banks in Singaporeset the SOR as the currency swap for the US dollar even though its currency movement directly influence the volume of the contracts and trading. SOR is offered in terms of 1 month, 3 months, 6 months, and 12 months.

SIBOR and SOR pegged home loans

This refers to variable or market pegged floating loan packages offered by most banks using the SIBOR or SOR rates. The interest rate for these loans  is the spread + SIBOR or SOR.

How do you define bank spread?

The profit margin that banks or other financing institutions use to gain income on top of the SIBOR or the SOR rate is called the spread. For example the SIBOR rate is 1%, then the bank would like to gain 2%. The 2% is the bank spread. This means that the client would get the SIBOR + spread = 1% + 2% = 3% rate. A few years after the start of the loan, the bank usually changes the spread. The revision usually reflects an increasing bank spread as shown below 

Period	Interest Rate (p.a.)
First Year	0.75% + 1-Month SIBOR
Second Year	0.75% + 1-Month SIBOR
Third Year	0.75% + 1-Month SIBOR
Fourth Year	1.00% + 1-Month SIBOR
Thereafter	1.25% + 1-Month SIBOR

What are the benefits of using either a SIBOR or a SOR rate?

We would like to correct the misconception of most people. You must understand that although the two correlate with each other, the SOR tends to fluctuate more and can be above or below the SIBOR rate. Please take a look at Figure 1, 2, and 3 below for clearer explanation

Figure 1: 1-Month SIBOR/SOR for Jan 2012-Dec 2012

 Source: www.iCompareLoan.com

Figure 2: 3-Month SIBOR/SOR for Jan 2012-Dec 2012

Source: www.iCompareLoan.com

Figure 3: 3-Month SIBOR/SOR for Dec 2006-Aug 2012

Source: www.iCompareLoan.com

 Here is a piece of advice for those who are planning to apply for a housing loan: Always ask for the bank spread and evaluate the interest rate throughout the duration of the loan. Is the spread reasonable enough for you to take?

Differentiating the features of SIBOR and SOR

For both SIBOR and SOR,  their tenures are usually inversely related to their rates. For example, a 1-month SOR will be lower than a 12-month SOR.  This is because long term opportunities are more risky and normally incur higher opportunity cost.

A shorter tenure SIBOR is more volatile than a longer tenure SIBOR.

SOR fluctuates more than the SIBOR.

SIBOR tends to be preferred by risk-averse borrowers.

Recently banks started rolling out 1-month SIBOR packages which impact their administrative cost.

From Figure 4, we can see that the 1-month SIBOR is  lower than the 3-month SIBOR. Take a look at the historical trend for the last 20 years in Figure 4.

Figure 4: 1-Month and 3-Month SIBOR for Jan 1989-Dec 2012

Source: www.iCompareLoan.com

When is the right time to choose a 1 month or a 12 month SIBOR?

You must understand that choosing a shorter tenure SIBOR also means greater instability. The rates are being changed or modified in shorter intervals. This means that if you take the 1-month SIBOR rate, depending on the financing institution, you can get a change of rate in every 1 or 3 months. However, if you choose the 12-month SIBOR rate, you have the confidence that you will pay the same SIBOR rate for the next 12 months. You may find it beneficial to seek the advice of an expert before you decide which housing loan package to take. Free advice and loan package consultation may be obtained from http://www.iCompareLoan.com/or simply fill up an enquiry form at http://www.iCompareLoan.com/contact

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For more related articles, please visit the following websites:
www.PropertyBuyer.com.sg/articles
www.SingaporeHomeLoan.net
www.iCompareLoan.com

About Property Buyer
http://www.PropertyBuyer.com.sg/mortgage
We are a research-focused Singapore mortgage consultancy which helps you compare Singapore home loans either for new loans or refinancing. We use loan reports from Singapore's best loan analysis system (exclusive to us) at http://www.icompareloan.com/consultant/to serve our customers.
Our services are completely FREE to you as the banks pay us a referral fee upon loan disbursement.
SMS: (65) 9782 8606
Email: loans@PropertyBuyer.com.sg

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How Do I Choose Between a Fixed and a Floating (Variable) Rate Home Loan?

The following is a guest post by Property Buyer

People are almost always caught up with the decision of which Singapore home loanis best for them - within themselves, there is always the constant debate of whether one is better than the other. Will choosing a mortgage type depend on the person’s intelligence, instinct, bookkeeping skills, or attitude on sound money management? How does a buyer’s situation affect his or her decision to use either a fixed or a floating home loan?

Fixed-rate mortgage

Mortgage packages offering a fixed home loan rate provide a specific constant rate for a certain period of the loan.

For example, if you are buying a house now with a fixed rate home loan at 2.3% per annum, then the 2.3% per annum would be the interest rate for the fixed period which could vary between 3 to 5 years, depending on your package and its terms.

After the fixed period ends, the interest will convert to a 1) variable loan package rate, or 2) rate pegged at a discount below the bank's board rate.

The following illustrates an example of the rate structure for a fixed rate package.

Bank Y Fixed-rate Loan

Period	Interest Rate (p.a.)
First Year	1.15%
Second Year	1.35%
Third Year	1.45%
Fourth Year Onwards	0.50 % below the Board Rate

During this fixed period, if there are changes in the interest rate environment to a lower rate, the borrower will have a higher opportunity cost as he may be able to enjoy lower loan rates with a variable rate loan instead.

Floating (variable) rate mortgage

The interest rate for this loan type is dependent on the base rate and the spread or margin being used by the bank or lender. Borrowers who are savvy about interest rate movements often choose the floating home loan rate to obtain cost savings, especially those who are financially secure and in total control of their wealth as they will be able to afford the higher interest payments shall rates suddenly soar.

Most of the floating (variable) rate mortgages use a interest rate that is benchmarked against SOR (Singapore Swap Offer Rate) or SIBOR (Singapore Inter-bank Offered Rate), which is the variable component of the interest rate.

The bank will add a spread or margin to SIBOR or SOR. Together, the two will form the interest rate. For instance, the rate could be 3-Month SIBOR + 1% , where the 1% is the spread.
The spread is usually adjusted upwards after the first few years of the loan. An example of an interest rate structure for a floating rate loan follows.

Bank X SIBOR Loan

Period	Interest Rate (p.a.)
First Year	0.75% + 1-Month SIBOR
Second Year	0.75% + 1-Month SIBOR
Third Year	0.75% + 1-Month SIBOR
Fourth Year	1.00% + 1-Month SIBOR
Thereafter	1.25% + 1-Month SIBOR

What are the factors you should consider when deciding which loan type to use?

1. Understands market interest rate trend

Accuracy is very important in forecasting and tracking interest rate trend. If you are able to do so, you can derive significant interest payment savings from a floating (variable) rate loan during a low interest rate environment.

2. Financial and health uncertainties

If you are unsure about your financial capacity and health a few years from now, then the fixed home loan rate is best for you. You can lock in and secure the rate for the fixed duration.

3. Cash repayments

Paying your loan in cash every month with a fixed home loan rate makes financial planning easier. Use iCompareLoan home loan comparison system to learn the rates for the different loan packages to help you find the ideal mortgage package.

4. Tolerance for risk

Each type of home loan rate has its own benefits. The question is how far can you tolerate a higher rate?

Of course, no one will be sad to accept a lower rate, but, considering your financial capacity, can you afford  paying a higher rate for a certain period of time? If yes, you can consider a variable rate loan because with it you can have reduced interest payment when interest rates are low, but you will have to incur greater payment if rates climb.

Given the many factors you have to take into account when deciding between the two types of loans, you may prefer some professional help. Turn to the friendly and experienced mortgage brokers at www.iCompareLoan.comtoday.

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For more related articles, please visit the following websites:
www.PropertyBuyer.com.sg/articles
www.SingaporeHomeLoan.net
www.iCompareLoan.com

About Property Buyer
http://www.PropertyBuyer.com.sg/mortgage
We are a research-focused Singapore mortgage consultancy which helps you compare Singapore home loans either for new loans or refinancing. We use loan reports from Singapore's best loan analysis system (exclusive to us) at http://www.icompareloan.com/consultant/to serve our customers.
Our services are completely FREE to you as the banks pay us a referral fee upon loan disbursement.
SMS: (65) 9782 8606
Email: loans@PropertyBuyer.com.sg