This article talks about the impact of high property prices on the future generation, and why it is not sustainable.
http://tankinlian.com/admin/file.aspx?id=665&PK=0a6a457322dc10309736ac1a7c2235a2
http://tankinlian.com/admin/file.aspx?id=665&PK=0a6a457322dc10309736ac1a7c2235a2
9 comments:
Hi Mr Tan
With the LIBOR scandal, I would not be surprise that eventually this rate will be adjusted upward, and correspondingly the SIBOR rate. Those who are using the variable rate mortgage will be hit hard with their monthly home installment...
Hi Mr Tan, if you see today's ST on page A3, Home loan repayment can now stretch to 50-years.
Lastly I would like to point out the calculation mistake for the monthly repayment in your two examples:
at 1.5%, 30 yrs loan of $2.5M, the monthly repayment should be $8,628.01
and at 4%, the monthly repayment should be $11,935.38
You may wish to verify from this website:
http://www.usdebtclock.org/mortgage-loan-calculator.html
Incidentally thank you for you insightful sharing.
With no offence intended.
Apology if you felt offended.
@10.45 am
The figures are quite close and reflect the treatment of monthly or annual payment. It does not really matter. No need to be so fastidious!
Here is an article about property.
Offers new and original insights.
Very relevant to Singapore.
But you must be patient.
The insights and relevance to S'pore becomes apparent only by the 12th paragraph.
After reading, you will understand the property game that is being played on us.
http://finance.yahoo.com/news/elites-built-americas-economic-wall-223644894.html
Thanks for warning readers every now and then of the danger Mr Tan!
You would have saved the happiness of many families, including mine!
Many Singapore property investors are not aware of the fact that when the bad/recession time hits the market, both the developers and the banks can join hands to squeeze the borrowers of high mortgage by auctioning/foreclosuring their properties at rock bottom prices. Such strategy is commonly used and it's similar to local stock market when the stock speculators are not able to pick up the shares which they enter to buy a week earlier. The big fish comes in to swallow their open-contra positions at a distress price a week later. Hence, they suffer a great loss becasue of "greed".
Any mortgage housing loan(except for owner-occupied) with a repayment period that exceeds 20 years to which would be at a very high risk especially with the down-cycle of property market taking place(that will undoubtedly happen at any given time). Singapore's property market is now at the level of unsustainable period because of uncontrolled huge numbers of immigrants. There is a popular saying that this group of so-called FTs(Foreign Talents) will leave Singapore anytime under two(2) conditions - either when Singapore is in trouble or they have made enough here. So beware!
The Govt now realises too late that copycatting China by letting property development to be one of the cornerstones to push up GDP growth. By not clamping down on the runaway prices earlier on, now they face the difficult decision to retract or proceed on, it's a political nightmare if more serious retraction leads to foreign owners abandoning their properties here (bought on mortgages), thereby threatening the mortgagors' (Banks) survival.
Or local owners facing huge negative equity on their expensive homes bought at the peak of the market.
The Govt this time has forced themselves into a corner, and they still call it doing the best for Singapore. Such thick faces they've got.
Why not sustainable ?
If a 50 year mortgage not enough, just make it 100 years !!
As long as you can pay, its taken to be affordable !
Again, fear mongering about rates going up... SIBOR or LIBOR.
Look, in the first place, interest rates are man-made, decided by a collection of humans with titles such as "banker".
As long as they ( the bankers) feel, that keeping the rates low is to their advantage, they will design it as so.
This was decided already by US Fed.
And they will keep it low till 2014.
So, fear mongering again that "rates will rise" Sure! off course rates CAN rise, no doubt about it!
But think again. How much will it rise? Will it rise to the extent that it will dampen growth? How about 200% increase from this current rate of 0.2%?
Even if you factor in a 1000% increase from this current base, what will be the new rate ( after 2014)??
lack of growth is their greatest fear ( bankers & politicians) and they will do all possible to stimulate it.
Property prices WILL continue to rise and interest rates will remain low ( below 3%).
Here is a quote from property researcher:
Alan Cheong, research head at Savills Singapore.
“Developers have reaped super normal profits from 2005-2011. You can starve them for a year and nothing will happen,”
Cheong added that developers are not afraid to sit on unsold inventory, noting that for many of their projects, they breakeven when they clear 65-70 percent of the units.
“They have no compunction in the immediate term to lower prices to clear the inventory,” he said.
Friday, 20 Jul 2012
By: Ansuya Harjani
Assistant Producer, CNBC Asia
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