Home Loan Interest Rates For First Time Buyers

Home Loan Interest Rates For First Time Buyers – Comments Are property prices in Singapore falling? The following is a snapshot of the real estate market in 2023 to date

Meanwhile, some homeowners – even investors – may think this isn’t so bad (although real estate agents and brokers fear another cold snap.) Post-Covid prices have caused some people to abandon home ownership. across the board, while fixed resale prices have sparked public debate. But there are some signs that, as we enter the fourth quarter of 2023, the bull run may lose momentum:

Home Loan Interest Rates For First Time Buyers

We saw a recent report that, in the second quarter of this year, private home prices fell slightly by 0.2%. The number is not large, but it is important because it is believed that this is the first time that this has happened since the first quarter of 2020. It followed the news of new sales of houses falling below 217 in September (which is the lowest number in December 2022). 170 new units).

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As usual, this often happens because there is no new establishment at this time and it also coincides with the seventh month.

This means that, if we look at the quarter, in the third quarter of 2023, developers sold 2,024 new homes. This compares to the same period in 2022, when fewer new units were released but producers still enjoyed higher prices.

If so, this could be a sign of change. Perhaps all the cooling measures, combined with high interest rates, are starting to lower property prices. So, for a short-term perspective, we look at home price trends over the past year, by region:

The drop in CCR was much expected. This was due to the cooling measures in April 2023, which increased ABSD prices (especially the number of ABSD for foreigners, which doubled to 60 percent.) Investors and foreigners account for a large part of the main assets of CCR, so that the area is expected to meet. great growth. more difficult to come.

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That said, we don’t think the lower CCR rates will mean much to most homebuyers. Only rich people like to buy houses in areas like Tanglin, Orchard, Bukit Timah, etc.

The increase in RCR’s property was due to the establishment of Terra Hill condominiums, as well as the special establishment in District 15. The three main launches – Grand Dunman, Tembusu Grand and The Continuum – all happened next to each other (you can see). (This is the sales volume.)

The realtor also opined that with CCR rates rising, investors and middle-income earners may go for RCR. so we may continue to see price increases here.

Our attention should be focused on OCR, where most home buyers congregate. Note that prices here have only increased by 0.12 percent over the past year. This is even the case with (in our opinion) solid startups like Lentor Hills and Lentor Modern.

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HDB developers can’t get $2.5 million + RCR and CCR smooth numbers right. Most will live in OCR, where condos can be priced at $2 million or less (thanks to the return of condos for sale.)

For home buyers, it may be a relief that the area is not expanding, even with new homes coming up. Of course it would be better if the prices fell, but compared to the astronomical price increase of the last two years, many people would think that the “high level” is good.

There will be a period in 2021/22 when many new releases sell big over the weekend. A general rule of thumb is that anything over 70 percent will be considered a good trigger, and we’ve seen some over 80 percent (like Lentor Modern), even in new environments like Lentor.

Things are different in 2023 as we see that consumers are more selective. While there are well-known projects such as Blossoms by the Park and The Reserve Residences, many other startups sell for 40 to 50 percent. This may seem like a new level of success and we can’t expect the same numbers in the future.

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The reasons for rising house prices are multifactorial, but one reason is the lack of supply (although the situation is more difficult in the HDB market than in the general market). quickly, perhaps due to the lack of a short period of use.

The main issues are whether builders have enough land to build on and whether they have incentives to do so. And throughout the year 2023, the public Real Estate will provide 9,250 new homes (including EC). This is the highest number we have seen in 10 years.

We doubt that the increased supply will force developers to lower prices, as they are already operating on thin margins. However, addressing the supply shortage will reduce inflation.

In August 2022, the rate of SORA (interest linked to the bank) is 1.28 percent. At the end of August this year, the rate was 3.69. On average, the loan interest rate is going to 4%.

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A higher interest rate means more monthly payments. This doesn’t just reduce consumers out of caution. There are restrictions imposed by the government that must be followed. The total debt service ratio (TDSR), for example, reduces monthly payments to 55 percent of the borrower’s monthly income (including other debts).

For luxury home buyers or condo buyers*, there is also a discount rate (MSR), which reduces the monthly payment by 30 percent of the monthly income (

The service rate, along with the high interest rate, can force consumers to pay more than they can afford. Therefore, the combination of performance and increased interest rates also lowers housing prices.

Some flat buyers may need to use bank loans instead of HDB loans, as those used to exchange bank loans have fallen. EC buyers cannot use HDB loans and must use bank loans.

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Deferred Payment Programs (DPS) tend to be opened only when producers have remaining shares. DPS applies to projects that have received a temporary operating permit (TOP) – under this system, buyers usually pay 20 percent and do not have to pay anything for the next 24 months. This is useful for buyers who are living without a person (waiting for PR status), who will save a lot of money thanks to the new 60% foreign ABSD.

In most cases (but not all), the buyer is allowed to borrow immediately, obtaining the loan amount before the loan starts. The disadvantage of this system is that the cost is always high due to its flexibility.

We’ve seen these designs grow exponentially over the past few months. This may indicate that manufacturers are seeing more units remaining after TOP, indicating that it is becoming difficult to move units.

September saw the slowest drop in resale prices, the second since February this year. To be clear, this is a small month-on-month movement (0.6 percent from the previous month), and resale prices remain at about 4.9 percent year-over-year. Some experts say that this is due to the introduction of the BTO in October, but until now, it remains to be seen whether the introduction of the BTO will attract more demand from the market.

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However, the increase in prices over the past two to three years may not be sustainable. This is due to an increase in the number of BTO implementations from 2021, which is expected to disrupt further demand in the retail market.

If we look at the volume, for example, the number of resale decreased by 4.6% between the first and second quarter of this year. The total number of transactions (about 6,409 homes) was the lowest since the third quarter of 2020.

So we have to think about a new wild card in the HDB market: introducing new models of Prime, Plus and Standard, which will replace the old system of mature and immature areas.

As this was only launched on National Day and the first Plus flats will not hit the market until 2024 (around Bayshore), it is too early to say how this will affect the HDB market as a whole.

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As mentioned in the article linked above, there are suggestions that this new model may cause a short circuit in some important buildings. This may be because the new model is not used repeatedly. so there are apartments in prime locations such as Bishan, Queenstown, Tiong Bahru etc. which may be eligible for Prime or many flats but

Have Subsidized Recovery or 10-year MOT. This could increase demand and house prices, especially in the near term.

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