Choose the Best Package for your Property

I have client who is planning to buy or refinance often confused with the various package offered by the bank.

Each Bank have their own specialty package just like each restaurant having their own "Signature dish". If you are planning to eat crab but the restaurant offer you crayfish , think twice before you commit to them coz it might not suit you...

Typically the packages are as follows:
1) SIBOR
2) SOR
3) Combo
4) Variable Rates
5) Fixed


SIBOR (Singapore InterBank Offered Rate) 

Sibor is a daily reference rate based on the interest rates at which bank offer to lend unsecured funds to each other in the Singapore wholesale money market.

Sibor come in terms of 1/3/6/12 months. Terms which Bank often offer are 1/3 month Sibor.

Highest 3M SIBOR was 7.75% which happened in Jan 1998
Lowest 3M SIBOR was 0.25% which happened in Sept 2001

Bank offering SIBOR:

BOC, CIMB, CITIBANK,  DBS , HSBC, MAYBANK, OCBC, SCB, UOB,

SIBOR is transparent and can be view daily via Business Time , Housing Matters and other web sources.



SOR (Swap Offer Rate)

SOR is the cost of borrowing SGD synthetically by borrowing USD for the same tenor and swapping out the USD in return of the SGD and normally implied from the USD/SGD forward prices.

SOR come in terms of 1/3/6/12 months. Term which Bank often offer is 3 month SOR

Bank Offering SOR:

ANZ, BOC

SOR is transparent and can be view daily via Business Time , Housing Matters and other web sources.



COMBO

Combo is the average of both 3 month Singapore Interbank Offered Rate (SIBOR) and Swap Offer Rate (SOR)

Bank offering Combo:
ANZ



Variable Rates:

Variable Rates are pegged to the Bank Internal Board Rate. It means that Bank can review the rates as and when they need to. This causes certain level of uncertainty to what borrower have to pay in the future. The Home Loan interest rate will be adjusted accordingly.

Ie
1st year: ABCMR - 4%
2nd year: ABCMR - 3.5%
3rd year: ABCMR - 2.5%
Current ABC_Mortgage Rate (ABCMR) is 5.00%

You will be paying:

1st year : 1% (floating)
2nd year: 1.5% (floating)
3rd year: 2.5%(floating)

When ABC bank changes their ABC_Mortgage Rate (ABCMR) to 6 %,

You will be paying:

1st year : 2% (floating)
2nd year: 2.5% (floating)
3rd year: 3.5%(floating)

Bankers may often say that their Board Rate have not been changing for the past years but do bear in mind that Variable rates are not Transparent and is subjected to review as and when the Bank needs to.

Bank offering Variable Rates:
CIMB, MAYBANK, OCBC, RHB, UOB




Fixed:

Bank will normally offer client fixed package from 1 year to 5 years. Fixed rates is normally higher than the rest of the package (SIBOR, SOR, Variable, Combo) .Typically the longer the fixed period the higher the interest rate as the bank will have to bear the risk of interest rate going up.

Fixed package are normally meant for Completed Property.

Bank offering Fixed rate:

BOC, CITIBANK,  DBS , MAYBANK, OCBC, RHB, SCB, UOB,


If you have any question unsolved, you can either get me via my Mobile at 9 1 7 6 7 9 7 0 or email me at den@housingmatters.com.sg or even drop a comment below :

Den Ng
Housing Matters
http://www.housingmatters.com.sg