When to Refinance Your Home Loan in Singapore

By Joanne Poh (via moneysmart.sg)

Singapore — Your home loan is probably the single biggest financial commitment you’ll ever take on, and one you could spend the next few decades paying for. Given the magnitude, you obviously want to ensure you lighten the load as much as possible. That’s why it’s so important to be aware of when it’s time to refinance your home loan.

It can save you thousands of dollars over the years, raise your capital gains on resale and basically make your expensive home purchase a bit less expensive.

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Property Update (23 Feb 2016)

Is the rapid economic growth in the Philippines sustainable? | channelnewsasia.com

Despite the global slowdown, the Philippine economy stayed strong in the last quarter of 2015, with GDP growth accelerating over 6 per cent. Channel NewsAsia’s Aya Lowe asked Lito Camacho, vice-chairman of Asia Pacific at Credit Suisse, to find out if this economic momentum is sustainable. More >>

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Impact of rising US interest rates to property investments in Singapore

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By Istvan Loh,sbr.com.sg

The US economy is doing well and the Federal Reserve has raised interest rates for the first time in almost a decade in a bid to tighten money supply.

While the rate increase was small at 0.25% per year and widely anticipated, it is highly likely that more increases will follow. As the liquidity in the US financial market is reduced, there could be far-reaching implications on the global economy.

Singapore property investments will also be impacted by the Fed’s new policy as interest rates here mirror the increase in the US.

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10 Essential Home Loan Terms You Should Know

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When it comes to home loan contracts in Singapore, it’s hard to escape the number of terms that get thrown in our face that look like complete gibberish. These are usually accompanied by lengthy pages of terms and conditions that most of us can’t be bothered to read through.

While you may not need to understand every word stated in the documents, we at GET.com recommend that you at least get a grasp of the list of 10 basic home loan terms below so that your home loan broker/banker knows you’ve done your research and will think twice about glossing over the details.

Since buying a home is probably one of your biggest life expenses, it pays to know what you’re dealing with when you apply for a home loan. Understanding these terms will give you a clearer picture of the actual cost of the home loan and help you find out which type of home loan will be best for your own situation. Here are 10 basic home loan terms that you need to know:

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Why Refinancing Your Home Loan Is Still Worthwhile Even Without a Legal Subsidy

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By Peter Lin, moneysmart.sg

In some ways, find a good home loans like finding the perfect life partner. You always want what’s best for you. And you’re expected to spend the rest of your life paying back the home loan. Yes, 70% of you voted for that. Unlike finding the perfect life partner, however, you’re not expected to spend the rest of your working life with the same bank paying back your home loan. There’s no loyalty when it comes to saving money on your home loan. You should refinance your home loan as soon as you’re able to.

Wait a minute… what does refinancing my home loan mean in the first place?
Refinancing means you switch your home loan from one bank to another. Don’t worry, it’s not like a break-up. As Michael Corleone said in The Godfather, “it’s not personal, it’s strictly business.” Literally.

But I like the service my bank is providing me. Why should I refinance my home loan?
Most fixed or floating rate home loan packages charge lower interest rates for the first three years. Then, in the fourth year and beyond, the interest rate usually goes up.

When this happens, it makes sense to shop around and see if other banks have better rates. Better almost always means lower interest rates. The whole point of refinancing is to save money by lowering your monthly payments, pay off the loan faster or to respond to changing market rates due to a rising SIBOR.

But refinancing seems like complicated process. Is it worth it?
Since home loan packages usually have a higher interest rate from the fourth year onwards, you’re going to be paying more each month if you don’t refinance. So unless you think your bank is a charity needing your financial support, it doesn’t make sense to stay with them if there’s a better option out there.

Refinancing also helps you avoid escalating market rates. Say you’ve been on a SIBOR-based floating rate package and taking advantage of the low rate thus far. Now that the SIBOR is on the rise, switching to a fixed rate home loan might save you money in the long run.

Sounds good! Let’s get our home loan refinanced now!
Whoa, whoa, whoa… let’s find out how much refinancing costs first. Back in October 2012, MAS prevented banks from packaging legal subsidies and other freebies into the loan. As a result, most banks like DBS, UOB and OCBC have stopped offering legal subsidies altogether. Even though it’s technically still legal as long as you’re not forced to take it up.

It’s kinda like chewing gum – it’s not illegal to chew, it’s just illegal to bring it into Singapore. But there will always be the by the book kids who think they shouldn’t be chewing gum anyway.

Anyway, because banks aren’t allowed to include legal subsidies in their refinancing package, there are now three main factors to consider when refinancing:

  1. Legal fees – about $1,800 for HDB, $2,500 to $3,000 for private property
  2. Valuation – about $500
  3. Fire Insurance – about $100 to $300 per year

So, all in all, refinancing for a HDB flat is about $2,500, while refinancing a private property would cost about $3,500.

Wow… that’s seems rather expensive. What are my options?

  1. Refinance to a home loan package with a legal subsidy
    Just be aware of what taking on a legal subsidy might cost you down the road. Legal subsidies usually come with a clawback clause. Clawback means that the bank can claim the subsidies back from you if you refinance within the lock-in period (usually three years). This means you might end up missing out on a good loan package simply because it doesn’t make sense to refinance and incur the clawback.
  2. Refinance to a home loan package without a legal subsidy
    Since most banks don’t offer legal subsidies, it might seem like an expensive idea to refinance. But actually, you just need to do the math.

    Firstly, you need to ask yourself if you’ll save more money by refinancing even though you have to pay the legal subsidy. For example, say refinancing will help you pay $600 less each month. Even though the cost of refinancing is $3,500 – you would have still saved money by the end of the year. However, if refinancing will only save you $100 in monthly payments each month, then it might not be worth your while. After three years, you would only have saved $100 – definitely not worth the effort of refinancing.

    Secondly, you need to ask yourself if you have the cash to refinance. If not, you are allowed to use your CPF to cover most (but not all!) of your payment. Whether you want to use your CPF or not is up to you – just remember that your CPF funds are earning a half-decent amount of interest.

  3. Repricing
    Repricing is basically “refinancing”, but with the same bank. However, in most cases you will not be able to use your CPF for repricing. So make sure you have sufficient cash on hand.

Source : http://blog.moneysmart.sg/home-loans/why-refinancing-your-home-loan-is-still-worthwhile-even-without-a-legal-subsidy/

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Property Update (27 April 2015)

City of Chengdu is emerging as a hot spot for investments | channelnewsasia.com

CHINA : More than half of the world’s Fortune 500 companies are represented in the city of Chengdu and it is in the midst of a construction frenzy to become an economic powerhouse.

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Another Bishan maisonette flat goes for more than $1 million despite declining resale flat price index | straitstimes.com

SINGAPORE : Despite the declining resale flat price index, an executive flat in Bishan has sold for more than a million dollars this month.

The 149sqm executive maisonette in Blk 192, Bishan Street 13, changed hands for $1.05 million, according to the Housing & Development Board’s online data.

Built in 1987, the two-storey unit between the 22nd and 24th floors, has 71 years left on its 99-year lease.

Another maisonette at Bishan St 22 sold this month was priced at $812,000. The 146sqm unit is between the 7th and 9th floors.

Bishan is known for its record-beating HDB flat prices, but it now has competition from Pinnacle@Duxton. Read more here >>

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PH Banks tighten rules on property loans | philstar.com

Philippines – Banks tightened anew their lending standards for commercial real estate loans in the first quarter, a Bangko Sentral ng Pilipinas (BSP) survey showed.

“The net tightening of overall credit standards for commercial real estate loans was attributed by respondent banks to perceived stricter oversight of banks’ real estate exposure along with banks’ reduced tolerance for risk, among others,” the BSP said.

“In particular, respondent banks reported wider loan margins along with stricter collateral requirements and loan covenants for commercial real estate loans. At the same time, respondent banks also cited reduced credit line sizes and shorter maturities for this type of loan,” the central bank said.

This is the 11th consecutive quarter that banks tightened their lending standards for commercial loans, based on the quarterly Senior Loan Officers Survey conducted by the BSP.

Latest central bank data showed banks’ exposure to real estate increased 21 percent to P1.221 trillion last year from P1.006 trillion in 2013. Read more here >>


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KL-Singapore rail link may miss 2020 deadline by two years | asiaone.com

SINGAPORE : Keen travellers from both sides of the Causeway may have to wait a little longer for the multibillion-dollar high-speed rail link between Kuala Lumpur and Singapore as the project could be up and running some two years later than its original 2020 target.
According to sources, 2022 may now be a more realistic deadline for the completion of the mammoth project estimated to cost nearly RM40 billion (S$14.9 billion) as there are many “big moving parts” that have yet to be ironed out, rendering the 2020 deadline a tad too ambitious.

“This (the delay) is not necessarily a bad thing. It’s a huge project. More time is needed to sort some aspects out so that it can take off smoothly,” a source close to the project told The Business Times.

It is also understood that the engineering, procurement and construction (EPC) contract for the project – dubbed a “game changer” as it will cut travel time between Kuala Lumpur to Singapore to 90 minutes – may be awarded on a negotiated basis, although a firm decision on this has yet to be made. Read more here >>


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Penang real estate market is HOT | malaysia-chronicle.com

MALAYSIA : Iskandar usually gets the headlines in the Malaysian property story but Penang’s real estate market has had a bumper year.

Prices have surged 17 per cent from 2013 to the end of last year, according to a Credit Suisse report, easily exceeding the Malaysia-wide rate of 11 per cent.

The region accounted for 9 per cent of properties sold in 2013, making it the country’s third-largest market behind Klang Valley and Johor. Ms Christina Lau, head of marketing and sales at Malaysian-listed property group Eastern & Oriental in Penang, credited the strong performance in part to the policies of the state’s government.

She cited the Penang Paradigm, a 10-year development blueprint released in 2013 that focused on three elements of development: economic dynamism; liveability and sustainability; and social development and inclusion.

Additionally, Penang had been successful in carrying out its plans through public-private partnership, said Ms Lau. She also highlighted initiatives to improve the state’s infrastructure, such as the RM27 billion (S$10 billion) Penang Transport Master Plan.
This aims to overhaul the state’s transport system by building highways and improving public transport. The area’s good economic prospects have played a part as well. Read more here >>

Property Update (3 April 2015)

MAS expected to ease monetary policy: Analysts | channelnewsasia.com

SINGAPORE : Analysts have said that the Monetary Authority of Singapore (MAS) could ease monetary policy further, given the low inflation and weak growth outlook. The regulator is due to meet for its biannual policy review in April as it looks for ways to boost growth.

MAS unexpectedly moved to slow the rise of the Singapore dollar in January as plunging oil prices eased inflation.

To bolster growth, analysts are expecting MAS to further adjust its exchange rate policy as the Singapore dollar’s Nominal Effective Exchange Rate (NEER) trades near the lower-end of the band set by MAS.

Mr Francis Tan, an economist with UOB, said: “We do not think that they will lower the Singapore dollar NEER slope again. However, we think that there could be a one-off downward re-centring of the Singapore dollar NEER midpoint – by perhaps 2 per cent. What that means is that it will essentially weaken the Singapore dollar a bit in order to support export competitiveness in Singapore in 2015.”

A weaker currency would help exporters, whose goods become relatively cheaper in foreign markets. Read more here >>

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More want to buy homes, but with smaller budgets: Survey | todayonline.com

SINGAPORE : More Singaporeans intend to buy a residential property within a year, but are targeting homes in districts with lower prices because of declining budgets, a survey by real-estate portal iProperty has found.

The half-yearly Asia Property Market Sentiment Report released yesterday showed that the proportion of respondents who are looking to buy a property within a year grew to 38 per cent from 23 per cent in its previous survey in September. A total of 2,304 people in Singapore responded to the online survey.

But while the intent to buy is there, more respondents said they had smaller budgets, with 28 per cent of them looking to spend below S$500,000, sharply higher than the 18 per cent in the previous survey.

The number of people with budgets between S$500,000 and S$1 million also fell to 55 per cent from 66 per cent.

Analysts said the survey findings were not surprising, following the recent falls in prices of both private property and Housing and Development Board (HDB) resale flats. Read more here >>

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Singapore investment property picture darkens | yahoo.com

SINGAPORE : Singapore’s property prices may have largely defied doomsday predictions for a crash, but investors appear reluctant to step back into the market anytime soon.

“Singaporeans continue to see property as a key investment,” Sean Tan, a general manager for Singapore at iProperty.com (ASX:IPP-AU), said in a statement with the results of the real estate website’s market sentiment survey.

But while 29 percent cited rental income as a reason to buy, analysts are concerned about whether tenants and rents may be drying up.

“It has become increasingly difficult to rent out units as the increased completions and slower influx of foreigners is resulting in rising vacancies,” analysts at UOB-KayHian (Singapore Exchange: UOKH-SG) said in a note Monday, citing an 8.5 percent vacancy rate for condo and apartment units. Based on government data, the vacancy rate was around 7.8 percent at the end of 2014, the highest since the end of 2005. Read more here >>


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Home prices and inequality: Singapore versus other ‘global superstar cities’ | straitstimes.com

Republic’s housing kept affordable
The topics “superstar cities”, “inequality” and “housing policy” are often discussed separately.

I will focus on the area where they overlap – in particular, how housing policy has been used to mitigate inequality in the context of Singapore, a global superstar city.

The Global City concept originates from the work of sociologist Saskia Sassen, which dates back to the 1980s. In an age of globalisation, division of labour is international in scope and production activities are distributed across the world. A global city is a significant point where the internationally oriented financial and producer services that make the global economy run choose to agglomerate.

In the Economist Intelligence Unit’s Global City Competitiveness Index, Singapore is ranked third in global competitiveness after New York and London, and the most globally competitive in Asia. The fourth position is shared by Paris and Hong Kong, and Tokyo is ranked sixth. Read more here >>


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Vietnam’s property market generates new foreign interest | thanhniennews.com

VIETNAM : South Korean giant Lotte, after inaugurating last September Lotte Center Hanoi, a mixed-use development with offices, a shopping mall, hotels, and apartments, is now eyeing a similar project in Ho Chi Minh City.

With an investment of some US$2 billion, the Smart Complex in HCMC’s new Thu Thiem urban area would be one of its biggest projects in Vietnam.
Lotte is one of several foreign property investors to have recently upped their investment in the country.

Hong Kong’s Sun Wah Group has a more than 40 percent stake in a multi-million dollar project to build an apartment building complex in HCMC’s Binh Thanh District.
The group is currently the owner of the Sun Wah Tower in HCMC, and the developer of the $400 million Saigon Pearl residential-commercial complex. It also plans to build an industrial park in Hanoi and a resort in Vinh Phuc Province. Read more here >>

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PH Banks’ exposure to real estate rises, driven by loans | rappler.com

PHILIPPINES : The real estate exposures (REEs) of universal, commercial (U/KBs), thrift banks (TBs) and trust departments increased by 5.4% this quarter, buoyed by an increase in real estate loans (RELS) while non-performing real estate loans have continued to decrease, the Bangko Sentral ng Pilipinas (BSP) said.

The end-2014 figure was 1.221 trillion ($27.4 billion), an increase from P 1.159 trillion ($26 billion) in REEs recorded a quarter earlier.

The rise was attributed to the banks’ real estate loans (RELs), which increased by 6.8 % to P 1.043 trillion ($23.4 billion) quarter-on-quarter.

These loans represented 85.4 % of REEs during the period, with 60% of the RELs extended to land developers, construction firms and other corporate entities. The remaining 40 % went to individual households for occupancy.
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