Mortgage Loan - How To Choose Between 1-Mth Sibor And 3-Mth Sibor?

[Misc100 2]

Hi

How do you choose between 1-mth sibor and 3-mth sibor for mortgage loan?

What is the criteria for the decision-making?

When interest rate goes up, does it mean 1-mth sibor move up faster than 3-mth sibor?

The rate now is as follow:

Rate Type Rate

1 MONTH 0.31501 %

2 MONTHS 0.32641 %

3 MONTHS 0.39821 %

6 MONTHS 0.45429 %

9 MONTHS 0.5375 %

12 MONTHS 0.59667 %

http://www.loanguru.com.sg/sibor

[bepgof 20]

Hi

How do you choose between 1-mth sibor and 3-mth sibor for mortgage loan?

What is the criteria for the decision-making?

When interest rate goes up, does it mean 1-mth sibor move up faster than 3-mth sibor?

The rate now is as follow:

Rate Type Rate

1 MONTH 0.31501 %

2 MONTHS 0.32641 %

3 MONTHS 0.39821 %

6 MONTHS 0.45429 %

9 MONTHS 0.5375 %

12 MONTHS 0.59667 %

http://www.loanguru.com.sg/sibor

The 2,3,6,9,12 are actually refer to "moving average". Returned to teacher liao? Example, say 3 month MA:

Jan=0.5

Feb=0.4

Mar=0.3

So 3-month MA, as at march = (.5+.4+.3)/3 = 0.4%

Apr=0.6

So 3-month MA, as at april(drop the Jan data out) = (.4+.3+.6)/3 = 0.433%

Same approach applies to those 6,9 & 12 month MAs. The 1-month is a "single-tier" factor, up is up, down is down, no more & no less.

Those 3,6,12 months are "multiple-tiers", if the coming month's rate, either up or down, the "resultant MA" effect is not so "severe".

In above example, would you prefer a 1-month sibor which jumps from 0.3% in mar then 0.6% in apr, or a 3-month sibor at 0.4% in mar then a 0.433% in april?

Look like Euro would be weak( so USD strong) in coming many months(sibor/sor will inch up), and based on the facts that the past 12 months' sibor rates were pretty low, so, if NOW I were to take a mortgage loan, i would choose either a 6-month or even a 12-month offer, see the point?

[Misc100 2]

The 2,3,6,9,12 are actually refer to "moving average". Returned to teacher liao? Example, say 3 month MA:

Jan=0.5

Feb=0.4

Mar=0.3

So 3-month MA, as at march = (.5+.4+.3)/3 = 0.4%

Apr=0.6

So 3-month MA, as at april(drop the Jan data out) = (.4+.3+.6)/3 = 0.433%

Same approach applies to those 6,9 & 12 month MAs. The 1-month is a "single-tier" factor, up is up, down is down, no more & no less.

Those 3,6,12 months are "multiple-tiers", if the coming month's rate, either up or down, the "resultant MA" effect is not so "severe".

In above example, would you prefer a 1-month sibor which jumps from 0.3% in mar then 0.6% in apr, or a 3-month sibor at 0.4% in mar then a 0.433% in april?

Look like Euro would be weak( so USD strong) in coming many months(sibor/sor will inch up), and based on the facts that the past 12 months' sibor rates were pretty low, so, if NOW I were to take a mortgage loan, i would choose either a 6-month or even a 12-month offer, see the point?

thanks..i see the point..

but i do not understand..if the sibor has been consistent..

eg

1-mth sibor

nov 2011 - 3%

dec 2011 - 3%

jan 2012 - 3%

then shouldn't the 3-mth sibor (moving average) be around 3% too? but it is 3.9% now

[singaporesiborwatch 0]

Average 1month Sibor rate in 2011 was 0.28% whereas for 3month Sibor the average was 0.41%. In 2010, average 1month Sibor was 0.38% whereas for 3month Sibor it was 0.56%.

Currently, 1month Sibor is 0.32% whereas 3month Sibor is 0.39%.

So yes, typically 1month Sibor is lower than 3month Sibor and it would be advantageous to get a floating rate package based on 1month Sibor rather than 3month Sibor.

[Misc100 2]

Average 1month Sibor rate in 2011 was 0.28% whereas for 3month Sibor the average was 0.41%. In 2010, average 1month Sibor was 0.38% whereas for 3month Sibor it was 0.56%.

Currently, 1month Sibor is 0.32% whereas 3month Sibor is 0.39%.

So yes, typically 1month Sibor is lower than 3month Sibor and it would be advantageous to get a floating rate package based on 1month Sibor rather than 3month Sibor.

if interest rates are dropping, it would mean 1-mth sibor will be higher than 3-mth sibor rite?

[bepgof 20]

Mortgage loan is a "term loan" as well as an "ordinary annuity" in term of finance.

There are always more than meeting an eye for any mortgage loans and the ways the interests are pegged. If the mkt trend loan is heading "north east", 1-month will be more expensive the 3-month. If mkt loan trend heading "south east", then 1-month is obviously more advantangeous than the 3-month, so on and so forth.

Bear in mind that if you are using cpf to pay either part or full of the monthly instalment, bank will send you practically EVRYMONTH (except HSBC's present "fix" 12 months for 1-mon sibor package)abt the int change and of course you need to inform cpf accordingly...

Likewise for 3-month sibor, bank will send u every 3 months on int revision......

It is like restaurant & kitchen. Restaurants look very nice upfront, however, when you walk into the kitchen,.....

So, remember to read the FINE PRINT (kitchen)!

Edited February 6, 2012 by bepgof

[jsll 2]

Thanks!

It's really very informative here!

[Judii 0]

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