Saturday, July 16, 2011

Time for action on home loan rates?

Colin Tan
15 July 2011
TODAY (Singapore)
(c) 2011. MediaCorp Press Ltd.

Home loan rates are back in the news. In the latest move to maintain loan volumes in an uncertain
market, at least two Singapore banks have reportedly been dangling some of the lowest rates, currently
pegged at about 0.2 per cent to market benchmarks, on selected properties.

The offered mortgage rates are pegged against two commonly used benchmark interest rates. These
are the Singapore interbank lending rate (Sibor) and the swap offer rate (SOR). The three-month
Singapore dollar Sibor has been at a record low of 0.438 per cent since January, while the three-month

SOR has moved between 0.189 and 0.3 per cent since April. It now stands at 0.21 per cent.

The fact that these deals have not been offered to the rest of the market yet and with the marketing kept
low-profile, suggests that the banks themselves recognise that it would be counter-productive to engage
in an open mortgage war at this time.

However, it may not be too long before this happens, given the globaleconomic situation where at a
recent meeting of the United States Federal Reserve, policy-makers discussed “Quantitative Easing
Three”. And Fed chairman Ben Bernanke said on Wednesday that further stimulus might be needed to
help the US recovery.

Quantitative easing is a tool to try to revive the US economy by expanding the money supply via huge
purchases of government bonds. If this happens, foreign investors are likely to head back to our region
in a big way as they switch out of developed markets, such as the US and Europe, which have recently
been spooked by concerns of slowing growth.

The upsurge of fresh money seeking higher yields may trigger what one analyst calls the “mother of all

At 0.2 per cent, the first step towards buying a home must be almost painless. It may be the reason for
some of the recent buying in some projects in an otherwise gloomy market.

Buying sentiment had been significantly affected by the ongoing euro zone debt crisis. The last time our
private housing market was similarly downcast was in April last year when the Greek crisis erupted.

So, it was not the “Khaw” effect as some have suggested, referring to the uncertainty that has clouded
the market since Mr Khaw Boon Wan took over as Minister of National Development. Nor was it the
anxiety felt by the industry arising from the frequent blog postings of the minister.

It was due to macro-economic events. You cannot help notice the strong correlation every time a major
economic crisis looms on the horizon. But why should macro events play such a big part in affecting
buying sentiment? After all, home purchases are for the long term and should not be derailed by short term

Perhaps it is because most buyers these days are investors rather than owner-occupiers. Investors
always have their eye on the stock markets and when regional equity markets are rattled, they become

When it became clear to me about a year ago that there is a strong possibility that home loan rates may
remain low longer than anticipated, I sounded out to those around me that maybe we should
contemplate some official action to edge mortgage rates higher to reflect the longer term and to have
them at a more sustainable level. This would protect some of the naive home buyers or novice investors
from being seduced by the very low promotional rates for the initial loan period.

The first time I brought up the idea, many reacted in horror and dismissed it quickly without giving me a
chance to flesh out my suggestion. But as the months went by, each time I revisited the subject, I
noticed that the reaction, though still strong, was less vehement. Some were even beginning to be more
receptive to the idea.

More recently, I suggested that we change the rules by which the banks compete for home loans. All
loans should be on offered at a fixed rate for a fixed period, say, three or five years, but the banks
should be allowed to freely determine this rate. This means the banks can continue to offer 0.2 per cent
if they want to. However, the risk of assessing interest rate risks is passed onto the lenders.

Banks can protect themselves by hedging some of the risks by, say, offering better rates for fixed
deposit to cover themselves during this period.

Let me put it this way: Who is more able to gauge interest rate risks? As corporations with more
resources and being players in the financing industry themselves, banks are definitely better placed
than individuals to assess these risks.

The writer is head of research and consultancy at Chesterton Suntec International.

Home sweet loan

Robin Chan & Magdalen Ng
12 July 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

Home loans for as low as 0.2% for a few new projects and for a limited time. Move may be driven by
slowing mortgage applications

AT LEAST two Singapore banks have been dangling some of the lowest ever home loan rates,
currently pegged at about 0.2 per cent, on selected properties.

Analysts say the moves by DBS Bank and United Overseas Bank (UOB) may reflect intensifying
competition to maintain loan volumes in an uncertain market. These loans may be more attractive to
short-term property investors.

The two banks confirmed to The Straits Times yesterday they have offered mortgage rates pegged at
two commonly used benchmark interest rates - and not a whisker more - in the initial period.

These are the Singapore interbank lending rate (Sibor) and swap offer rate (SOR). The three-month
Singdollar Sibor has been at a record low of 0.438 per cent since January; the three-month SOR has
moved between 0.3 and 0.189 per cent since April. It is now 0.21 per cent.

The SOR tends to be more sensitive to exchange rate movements.

Typically, when banks use the Sibor or SOR, they add their own profit margin.

These new rock bottom rates are usually for a promotional period such as the first year or even longer -
after that a higher rate, such as the usual benchmark plus a margin, is applied.

Mr Vinod Nair, chief executive of website, which offers home loan comparisons, said the
low rates are more suitable for short-term investors.

Compare a SOR plus zero package that rises to SOR plus1 per cent after three years, and a flat SOR
plus 0.7 per cent package, on a $1 million, 30-year loan.

A person pays $5,430 in total interest for the first three years under the first package, compared to
$25,557 over the same period for the second, he said.

But over the 30-year loan tenure, he would actually pay less using the second package.

Dr Chua Hak Bin, economist at Bank of America-Merrill Lynch, said the latest trend could be because mortgage applications have fallen, and there is 'intensified competition among banks to maintain mortgage loan volumes'.

He said lenders may also be anticipating more cooling measures which could hit loan volumes, and the
global slowdown may cause banks to focus more on mortgages and less on riskier corporate loans.

While home loans eased, total loans rose 24.2 per cent in May from a year earlier, the 'same highs seen
in mid-2008 before the global financial crisis hit', he added.

But Mr Tan Kok Keong, Orange Tee's head of research and consultancy, said mortgage packages with
zero spreads are not new, and he does not think lenders are about to engage in a price war as not every
bank can match the low rates.

'Neither will there be a spike in speculators entering the market because of the 16 per cent (sellers')
stamp duty,' he said, referring to one government cooling measure.

There have been at least three property launches since April featuring low-rate packages.
DBS is offering a Sibor plus zero package for Skyline Residences - a freehold condo in Telok Blangah
launched last week - till next Monday. The zero rate is for one year, then it rises.

At Woodhaven, a Far East Organization project launched last month in Woodlands, DBS is offering an
SOR plus zero package applying to the loan period until the property's completion, before the zero rating
also rises. The offer is set to end soon. A DBS spokesman said these are 'tactical offers... usually
available for a very short period and selectively offered at some launches'.

UOB said it had offered the SOR plus zero package for The Boutiq in Killiney Road, but it has ceased. A
UOB spokesman said: 'Apart from projects committed to previously, UOB will not be offering the SOR
plus zero home loan package.'

OCBC and Citibank have not offered similar deals this year. OCBC's head of consumer secured lending
Phang Lah Hwa said: 'It is not uncommon for players to revise offerings to stay competitive.'

Hefty deposit for hospitalising baby and refund takes too long

11 July 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

MY 21-MONTH-OLD daughter was recently hospitalised at the National University Hospital (NUH) due
to high fever.

The only available ward was Class A1, so we decided to take that. To our horror, we found out that a
deposit of $5,000 was required. We inquired about Class B1 and were told that would require a deposit
of $3,000.

We had no choice but to place the $5,000 deposit due to my daughter's condition. I asked the staff when
this deposit would be returned as I had used my credit card and was worried about the hefty interest
charges. The reply was that it would take two months.

I asked whether the time taken to return the deposit would be shorter if I paid my bill in full when my
daughter was discharged, and the answer was 'no'.

I have a few queries:

* Why does it take two months for the deposit to be credited back to the patient?
* What if the hospital does not have available beds in the lower-class wards and the family cannot afford
the hospital deposit?

* Why are hospitals allowed to take such a hefty deposit when so many of us have Medisave accounts
which should be there to protect and lessen the amount of cash we have to fork out for our medical

Shahnawaz Saleem

No deposit needed if Medisave can be used: NUH

11 July 2011

Straits Times
(c) 2011 Singapore Press Holdings Limited

FROM our records, Mr Shahnawaz Saleem had requested the non-subsidised Class A1 ward for his child's admission, similar to a previous admission.

For patients who choose a non-subsidised ward, a deposit is usually required unless the patient's
insurance, employee benefits and Medisave (subject to withdrawal limits) are sufficient to cover the
estimated hospitalisation charges.

Mr Shahnawaz had indicated that he would not use Medisave for this admission. As we did not have
details of the quantum of his insurance coverage, to ascertain if it would cover the estimated
hospitalisation bill without the use of Medisave, Mr Shahnawaz was asked to furnish a deposit.

Our staff would generally advise that a refund may take up to two months if it involves Medisave or insuranc e claims which need to be processed. For a previous admission where Mr Shahnawaz had used
his Medisave, the refund was made three weeks after his child's discharge.

Mr Shahnawaz asked what would happen if the hospital does not have available beds in the lower-class
wards and a patient cannot afford the hospital deposit.

Patients who choose subsidised wards are not required to furnish a deposit unless the estimated
hospitalisation bill is higher than the Medisave withdrawal limits or if the funds in the Medisave account
are insufficient.

Despite this, patients needing emergency care and who have financial difficulty will still be admitted if
the medical condition warrants so. If the choice of ward type is temporarily unavailable, the patient will
be cared for at the accident and emergency department and admitted to the ward as soon as the
assigned bed is available.

On the rare occasion where waiting time for the bed is expected to be exceptionally long, such as when
there is a surge in demand due to the unpredictable nature of emergencies, we will make arrangements
for the patient to be transferred to another restructured hospital which can offer a bed in the chosen
ward type.

We thank Mr Shahnawaz for the opportunity to address his concerns and would like to apologise for any
misunderstanding that may have arisen from his interaction with our staff.

Ang Kwok Ann
Director, Finance
National University Hospital

Sunday, July 10, 2011

Not all hospitals allow Medisave for cancer tests

Salma Khalik, Health Correspondent

2 July 2011
Straits Times
(c) 2011 Singapore Press Holdings Limited

WHILE Medisave can now be used to pay for colorectal and breast cancer screenings, not all public
hospitals are on the approved list.

Tan Tock Seng Hospital and Changi General Hospital are not on the list for colorectal screening.

Alexandra Hospital is not approved for both breast and colorectal screenings.

These hospitals do provide the services but patients cannot use Medisave to pay for them.

The Straits Times understands that they missed the deadline for submitting applications to be included
in the list. They are now doing so and are likely to make it to the list in the coming weeks.

Polyclinics and private centres, such as Raffles Hospital, are also on the approved list. This can be
accessed at the Ministry of Health (MOH) website

Colorectal cancer is the top cancer here, with 1,500 new cases a year. Breast cancer is the top cancer
among women, with 1,400 cases each year.

Medisave can be used only at places that 'meet the quality assurance requirements for the scheme',
said MOH. The quality assurance takes into account 'patient safety, staff competency and clinical quality

A ministry spokesman said the ministry will work with more centres to reach the requirements for
inclusion on the list.

To encourage early diagnosis, which greatly improves the chances of beating the two cancers, the Heal
th Ministry decided to allow people to use Medisave to offset the high cost of screening.

They may draw up to $950 for a colonoscopy, though a higher limit of $1,250 applies if polyps are found.

On top of that, they may claim up to $300 for any additional charges, such as for medicine.

This test, which costs about $1,000, is recommended once every 10 years for adults from age 50.

There are also cheaper stool tests to check for colorectal cancer which can be done at most clinics.

These should be done annually.

Women can tap the $300 a year from Medisave that is set aside for outpatient use to pay for a
mammogram to detect breast cancer. A mammogram costs about $100. Women aged 50 to 69 are
urged to go for one once every two years.

Monday, July 4, 2011

Medisave can be used for mammograms & colonoscopies

Medisave can be used for mammograms & colonoscopies

123 words
30 June 2011
Channel NewsAsia
(c) 2011 MediaCorp News Pte Ltd. All Rights Reserved

SINGAPORE : With effect from July 1, patients can use their Medisave for screening mammograms and

The Ministry of Health said this would make screening tests more affordable and accessible to

It said the change would benefit around 450,000 women for mammogram screening and one million
Singaporeans for colonoscopy screening.

Patients can withdraw up to S$300 from their Medisave account each year to offset the cost of their

On average, mammograms cost about S$100.

Subsidised mammograms are available for Singapore citizens and permanent residents at participating
BreastScreen Singapore centres.

The Medisave withdrawal limit for colonoscopy screening will be pegged at the prevailing withdrawal
limit for day surgery procedures.

- CNA/al