HDB Loans vs Bank Loans
 

Hi everyone,

I wonder if any of you have bought their first properties, or considering to buy one in the near future, have you thought about how are you going to finance your property? I'm thinking of getting my first one in the next few years.

I've been reading up and it seems that Singaporeans tend to prefer HDB loans over loans from financial institutions even though the cost of getting a loan from financial institutions is so much lesser in this low interest rate environment.

May I know why? It will be good if you guys have real life experience to share!

Most Singaporean are dumb. Most peoples perceived that HDB loans are more stable and bank loans could jump up anytime in the future.

Infact fundamentally all the interest rate in Singapore is govern by SIBOR rate, where the banks could lend the money each other. The mortage is depend on the SIBOR, even HDB loans somehow are "concessionary" depends on SIBOR. So if the SIBOR jump up, the HDB loan could also jump up. The SIBOR infact is "secretly" pegged against some other prominent world interest rate (including USD interest rate). The trend for the following years to come are: "zero interest rates" policy, because of economic slowdown.

So taking bank loan now is actually better than taking HDB loan. However be worry that in the near future after long terms "zero interest rate" policy, the gov loss their ammunition to control the global economy. At that time all the house price across the mature economic country will be free falling ... that's including Singapore.

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