Singapore Savings Bond, Your New Savior?

A quick glance of the Singapore Saving Bond by BT.

SSB-BT

How can you benefit from this new Singapore Saving Bond?

Given that MAS still has not released the full detail for this new upcoming Singapore Saving Bong especially on the limit of funding that you can purchase with. So at this stage, it can be quite hard to formula any strategy in your wealth creation plan.

But in order for me to make any comparison, i will assume the limit of SGD 50k per individual. One big advantage of having this SSB as part of your portfolio will be it having better or similar interest rate with Fixed Deposit but without having to lock in your fund for X amount of time. And but it will be crucial, especially in times of emergency. Having a step up interest rate which mean the interest rate increase from 0.9%(First Year) till 3.3%(Tenth Year), it will be equivalent to an average interest rate of 2.4% over 10 ten years.

For such plan, i will recommend it to my parent or any retired elders. Mainly due to the flexibility in surrendering the SSB at any times and plus the good credit rating for SSB that backup by Singapore Government. Except if the elders are still working (Crediting of salary which is one of criteria for having additional 1% ) and they know how to operate internet banking, then like else, OCBC 360 may be better. Read on why i think OCBC 360 will be better

For working adult, i will think it’s better to have your fund in Saving Account like OCBC 360 (Note : For OCBC 360, interest rate will be reduced from max 3.05% down to 2.05%. And cap at SGD50k. For detail, click here). As a working adult with/without kids, i can easily earn up to 1.55% with OCBC 360, and max of 2.05% if all criteria being meet.

With OCBC 360, i could easily earn 1.55% or max of 2.05% each year, but on another hand for SSB, i can only achieved an average of 2.4% if i stick around for 10 years instead. A different of 0.35%(3.05%-2.4%) if we compare over ten years, whiles it will be 1.15%(2.05%-0.9%)for 1 year. Unless i in SSB for a longer term, else i will be better off with OCBC 360 or other saving account with higher interest rate.

But before making any decision, let wait for further announcement from MAS. For more detail on SSB, click on SSB factsheet for the full detail.

More homeowners look to refinance loans as SIBOR inches up

SIBOR inches up

SINGAPORE: More homeowners who took housing loans from banks are now looking for refinancing options. Loan specialists said they have been getting more inquiries since the recent spike in SIBOR (Singapore Interbank Offered Rate).

Homeowners – whose mortgages are tied to SIBOR – are now facing higher monthly payments. One of those affected is 30-year-old engineer Lai Ming Kwan, who bought an executive condominium with his wife two years ago and he opted for a bank loan that is tied to SIBOR.

With the benchmark rising sharply in recent days, Mr Lai is concerned about how it will affect him. He said: “They predicted that it will stay at 0.3 per cent to 0.4 per cent for a few years. I did not expect it would go up to so high … SIBOR is increasing so fast that my pay cannot catch up with the financing rates.”

Both Mr Lai and his wife are working and have a 16-month-old child. “Expenses, lifestyles will have to change a bit because I have to save up more to contribute to the housing loan … so there’ll definitely be an impact, maybe less shopping. With the child coming up, there is also school fees, childcare fees, so the depletion will come from my savings. Having a second child will also mean more expenses,” he added.

Some homeowners, like Mr Lai, cannot look into other financing options yet because their loan deal has a lock-in period, which requires them to stick to the same bank for a couple of years. However, loan specialists said that those whose lock-in periods are up are already starting to look at refinancing options. This can include looking for a housing loan with fixed interest rates instead of being tied to one with variable rates.

One mortgage consultancy said that it has received many inquiries on refinancing in recent days, about 30 per cent more when compared to last year. Mr Sean Lim, the mortgage consultant head at iMoney, said: “They want to know what is happening in the market … So they are taking time to digest and understand what is happening in the market.

“The pace of increment did catch me by surprise. But it is also half-expected. The trend has been going up slowly over the last six months. Looking at the market trend, it will continue to go up.”

With interest rates rising, banks can be expected to review their mortgage rates and plans. Analysts said that potential home buyers or those who are hoping to refinance their housing loans should choose a package that best suits their financial needs.

 

House owner must be aware of the increasing SIBOR and dont be caught by surprise, by this Refinance Loan Comparison tool to compare and shop around for their next Refinance Loan. Happy hunting!

 

Article from http://www.channelnewsasia.com/news/singapore/more-homeowners-look-to/1575034.html?cid=FBSG