Higher fixed rates for home loans Source: Straits Times By Melissa Tan HOME buyers seeking fixed interest loans to cushion themselves from the effect of an expected rise in global interest rates will find that some banks have already hiked their offers. On Monday, Maybank raised its three-year fixed rate for a mortgage by 0.1 percentage point while ANZ lifted its two-year rate by 0.17 percentage point, industry players noted. Some other banks appear to have pulled their fixed-rate packages off the shelf. The Straits Times understands that Citi used to offer a fixed-rate loan but stopped officially offering fixed-rate mortgages last month. Standard Chartered also no longer offers fixed-rate mortgages. Maybank's rates now start at 1.25 per cent for the first year and average out to around 1.4 per cent over three years, which are among the lowest in the market, while ANZ's two-year rate rose from 1.48 per cent to 1.65 per cent. Still, the higher rates are not biting deep as yet. For an owner with a 30-year mortgage of $1 million, an increase from 1.15 per cent to 1.25 per cent translates to only an extra $50 or so in monthly repayments. Banks declined to comment on the rate increase. Financial markets have been rattled by recent statements by the United States Federal Reserve chairman Ben Bernanke - who testifies in the US again tonight - that a massive US cash stimulus may be eased later this year. With the prospect that this may result in rising rates, the Monetary Authority of Singapore last month moved to introduce curbs over property loans to partly counter the risk of borrowers overstretching themselves. Home loans are usually either at a fixed rate or a floating rate, though some banks offer a hybrid package. SmartLoans.sg chief executive Vinod Nair said that about 60 per cent of Housing Board buyers prefer fixed rates, while only 25 per cent of private home buyers opt for fixed rates. Floating rates tend to be pegged to benchmark market rates such as the Singapore Interbank Offer Rate (Sibor), to which banks then tack on a premium. The premium has risen since the start of the year and now starts at around 0.85 per cent on average. The three-month Sibor was at about 0.38 per cent yesterday, though OCBC economist Selena Ling reckons that it may go up to about 0.39 per cent by the year end. That adds up to about 1.23 per cent for the first year, which is still lower than the 1.25 per cent Maybank is offering, for instance. FindaHomeLoan.sg founder Sean Lim said that some fixed rates are 0.1 to 0.2 percentage point higher than the floating rates. "Do not assume refinancing in the future will have lower spreads," Mr Lim said. The narrowing gap and fears that market rates could suddenly spike have prompted more home buyers to make the switch to fixed-rate mortgages. Consumer goods industry executive Shirley Ong, who is in her 30s, said she applied to refinance her mortgage at a fixed rate two weeks ago since it was not much higher than the floating rate. "It just seems wiser to lock in fixed rates," Ms Ong added. melissat@sph.com.sg Unfair to levy full tax on late father's vacant property Source: Straits Times | Forum Letters MY FATHER, who had been living alone, died suddenly a few months ago, leaving behind a property that has been vacant since his death. The Inland Revenue Authority of Singapore (Iras) subsequently said the property would be taxed at the full 10 per cent rate as it is not owner-occupied. While I support higher taxes for non-owner-occupied properties to discourage market speculation, the authorities would do well to review situations like mine. It is not practical for me or my siblings to move into our father's house as each of us has a family with school-going children; neither can we rent out the property as the legal process following our father's death has just started and legal ownership cannot be transferred until several months later. The legal system should recognise the time gap and avoid putting unnecessary burden on individuals for what they have no control over. The Iras should treat properties in such circumstances as owner-occupied until the ownerships are transferred and the rights can be acted upon. Chong Wai Sing Tampines Ave 10 site sees 10-way bidding war Winning bid of $289.7 million by Chinese developer surprises analysts Source: Straits Times | Money By Cheryl Ong A FIERCELY-fought tender involving 10 developers for a plot at Tampines Avenue 10 has stunned the market at its close yesterday, with a top bid of $289.7 million. Analysts said that the competition for the 17,102.9 sq m plot was unexpected given the new rules to prevent borrowers looking to sign new mortgages from over-extending themselves. The top bid for the plot designated for residential development was from Chinese developer MCC Land, whose bid translates into a price of $562 per sq ft (psf) per plot ratio (ppr). This was 7.6 per cent more than the next highest bid submitted by a tie-up between UOL Venture Investments and Kheng Leong Company - at $522 psf ppr. Jones Lang LaSalle's national director of research and consultancy Ong Teck Hui said that the top bid for the 99-year leasehold site was "way above expectations". He noted that that it was 34 per cent higher than an adjacent site sold in May last year, where Far East Organization's Q Bay is now being built. The tender outcome indicated that developers remain confident of underlying robust demand, despite the latest lending rules imposed by the Monetary Authority of Singapore, Mr Ong added. "In terms of the number of bidders participating in the tender, it's a vast improvement from the Q Bay site, where only three bidders participated," said OrangeTee's head of research and consultancy Christine Li. Ms Li said developers may have been swayed to throw in high bids by the overwhelming demand for J Gateway in Jurong East last month, where 99 per cent of the units there were sold on the first day of its launch. Analysts also said that MCC Land was determined to secure the plot as it plans to diversify from the northern region, where most of its residential projects are located. The plot is near Temasek Polytechnic, the Tampines Regional Centre and the upcoming Tampines West MRT station. It is expected to yield 530 units. The estimated breakeven price is expected to be between $940 psf and $990 psf, and MCC Land might launch its project at a price above $1,100 psf, said SLP International's executive director Nicholas Mak. ERA's key executive officer Eugene Lim expects demand for the upcoming development from MCC Land to come mainly from first-time home buyers as this segment is unaffected by the new MAS rules. The tender was previously scheduled to close on July 2, but was extended until yesterday. ocheryl@sph.com.sg Business parks command strong Q2 leasing demand Source: Straits Times | Money By Cheryl Ong BUSINESS parks saw robust leasing demand in the second quarter, with tenants signing up for some developments under construction well before completion, according to a report from property consultancy CBRE. Among them, Fusionopolis Phase 2A has only 10 per cent of space available for lease, after Jurong Town Corporation reserved "a significant portion" of space at the development, the report released yesterday showed. Tenants are also in talks for as much as 20 per cent of leasable space at Fusionopolis Phase 5, 18 months ahead of its completion, said CBRE. Overall, business parks are reporting pre-commitment from tenants for about 40 per cent of the new supply. CBRE also noted that about 5.43 million sq ft of leasable space in business parks is expected to be added from now until the end of 2016. The completion of DBS Asia Hub Phase II and Rigel Technology's research and development centre next year will account for most of the supply. Meanwhile, leasing demand at completed business parks held steady during the second quarter. The vacancy rate at these parks fell slightly to 6.2 per cent, from 6.3 per cent in the previous quarter, as tenants embarked on their expansion plans. Samsung took up more space at Mapletree Business City, while biomedical firm Covance expanded its laboratory space at The Synergy, CBRE noted. Despite the strong pipeline of space in the next four years, the possibility of over-supply remains low due to the pre-commitment level, said CBRE. In addition, CBRE noted that demand will be driven by companies moving from the central areas towards business parks. The ample supply of office space over the next few years is also expected to stabilise rents at business parks. ocheryl@sph.com.sg |