Friday, August 25, 2017

CPF Life’s Return (/Annuity) Calculator Online

Previously, I have made available a “CPF Life Payout-Return Online Calculator“ here:

where you can calculate the payout you are supposed to receive based on the expected annuity return you desire (which should be 4% according to CPF) if you can live to certain age!

However, for people who are only interested in calculating the expected annuity return only (based on the age they expect to be able to live until and the actual CPF Life payout they receive and the bequest you are entitled when the person die), that calculator is really a hassle and a pain in the neck!

For those who are only interested in calculating the expected annuity return only (based on the age you expect to be able to live until and the actual CPF Life payout they receive and the bequest), good news! I have now created another CPF Life’s Return Online Calculator which is specifically meant for that purpose!
Not only that, this calculator also allows you to enter the “Bequest” amount (in the “Future Value” box). This CPF Life’s Return Online Calculator is basically similar to an annuity online calculator!

You can access my CPF Life’s Return online calculator at this web link:

Ok, using my online calculator, you need to key in the following (for example):

Online Calculator for CPF Life's Return / Annuity
Name                                                             Value
Present Value ($)                                           -258811
Future Value ($)                                            91141
Number of Periods (months)                        120
Payment Amount ($)                                     1196
Interest Rate per period, %                           0.01
Interest Rate per Year, %                             
Payment At:        Beginning                          =End   

Instructions:
(a) To calculate interest rate for default input values: Press "ir" button to calculate interest rate for default values!
(b) To compute for other unknown value: Type in four known values, then press one of the buttons at the right to compute the unknown value. (E.g., to solve an example problem to compute "Future Value", press the "fv" button above)
(c) Always remember that money you paid out (put) into annuity should have negative value, while money you received should have positive value!
(d) Note: If you are not getting any computed result for computing "ir", try varying the value keyed into "Interest Rate per period, %"!
(e) Also enter the interest rate per period (not per year).

Example, to compute/solve for CPF Life annuity’s return (i.e. we are interested in the “Interest Rate per Year, %” figure), press the "ir" button above! This will result in the estimated CPF Life annuity’s return per period (in this case 1 period = 1 month) being shown in the box to the right of the text “Interest Rate per period, %” (and replacing the initial value of “0.01”)!  However, we usually deal with per year return and hence what we are really interest is the figure to the right of the text “Interest Rate per Year, %”!

Note that in the above, I assume:
(a)    The present value “-258811” is the amount you will have at 65 years old if you retain $166,000 at 55 years old in CPF Retirement Account.
(b)    The age by which this person will live till passing away to be 75 years old (for example), so the “Number of Periods” (which you would be able receive CPF Life payout) = (75-65)x12 = 120.
(c)    The “Payment Amount” is the actual CPF Life payout amount you receive, which is currently about $1196 pm for CPF Life Standard plan for women.
(d)    “Interest Rate per period, %” is what we want to calculate, and we can do so by clicking on the “ir” button (by clicking on “ir” using left-mouse-button).  If you are not getting any computed result or incorrect result for computing the interest rate after clicking “ir”, try entering a different value into the "Interest Rate per period, %" (e.g. 0.01, -0.01, etc)!
(e)    The “Bequest” figure is $91141 (based on CPF Board’s CPF Life payout estimator http://www.cpf.gov.sg/eSvc/Web/Schemes/LifePayoutEstimator/LifePayoutEstimator). If you want to estimate the CPF Life annuity return for the case where a person passes away earlier than the average life-span (and hence the “Bequest” is more than $0), you can enter the “Bequest” figure in the box to the right of the text “Future Value”!

Remember to use negative values for money you paid into the annuity, and positive values for money you received (for both monthly payout and bequest). Also enter the interest rate per period, not per year (don’t enter anything into the “Interest Rate per Year, %” box!). If you are receiving monthly payments and have an annual interest rate, divide the annual rate by 12. Thus, interest rate for one period of an 8% annual rate is 8%/12 and is entered as 0.666666.

My "CPF Life’s Return Calculator Online" can be regarded as a complementary tool to CPF Life’s "CPF LIFE Payout Estimator".
You can access "CPF LIFE Payout Estimator" from the link in this URL...
               http://make-money-secrets.blogspot.com/p/useful-links.html

When you join CPF LIFE, you can choose between:
•  the LIFE Standard Plan; or
•  the LIFE Basic Plan; or
•  the LIFE Escalating Plan.
Each CPF LIFE plan provides a different combination of trade-offs between the amount of monthly payouts that you would receive and the bequest that you would leave for your beneficiaries. 

No details have been released as to how CPF Board derives the monthly payout and bequest figures, and also the interest you will earn for your money (that remains not disbursed yet), the insurance charges and also administrative fees levied on you, and hence your best bet will be just to calculate the over-all return of your CPF Retirement Account balance at 65 years old!
              

My "CPF Life’s Return Calculator Online" can give you an idea how much return has been assumed into the CPF Life payout based on the original CPF Life principle number (your Retirement Account balance at 65 years old) and the payout you are getting (to see whether you are getting better return from CPF Life than Insurance Annuity scheme) and the bequest amount (even touch wood you die before 82.5 years old when your RA fund has been totally drawn down).  You can also get a glimpse of which scheme is a better deal for you...  

Saturday, July 8, 2017

Retirement Amount + CPF Life (+ Inflation + Bequest) + How Much To Save p.m. Calculator Online

In my previous post, I had demonstrated how to use my Retirement Savings + CPF Life (+ Inflation + Bequest) Online Calculator for retirement planning, which you can access it here:

This retirement planning calculator allows you to compute how much you need to save (i.e. the retirement amount you need to save) by retirement age in order to be able to spend a certain amount of money per month (p.m.) during your retirement period before you are deemed to have achieved financial independent and able to retire!

Note that this retirement planning online calculator includes not only CPF Life payout money but also the effect of inflation and also considering bequest (i.e. the amount you want to leave to your heirs) into my Retirement Savings online calculator!  

In this new version of “Retirement Savings + CPF Life (+ Inflation + Bequest) + How Much to Save p.m.” Online Calculator which you access here:

it is basically the previous calculator with just additional calculation to tell you how much you need to save to achieve your goal of reaching the Retirement Savings goal by your desired retirement age.

The explanations regarding this online calculator I have already mentioned in my post. You are free to try out this new version. Hope it will be useful to all of you!

With my Retirement Savings + CPF Life (+ Inflation + Bequest) Online Calculator, now you can plan your own finances independently without needing the help of financial planners! (Beware of financial planners! – because some are all out to sell their products rather than to help you plan your finances and advise you appropriately for your retirement!)

Again, you can access all the online calculators that I have developed from this web link URL:



Saturday, October 22, 2016

Retirement Savings + CPF Life (+ Inflation + Bequest) Calculator Online


In my previous post, I had made demonstrated how to use my online calculator, which you can find it here:
    http://make-money-secrets.blogspot.sg/p/retirement-savings-online-calculator.html
to calculate how much you need to have saved by the time you retire.

I had illustrated for this example using my online calculator, where you need to key in the following:

Amount you would like to withdraw each month in retirement ($):  6000
Annual Interest Rate you expect to earn on savings (in dec., eg 0.03 for 3%):  0.01
Number of years you would like to make monthly withdrawals:  35 

Then, you can click on “Calculate” and the online calculator will give you the output as:
This is how much you need to have saved by the time you retire ($):   $2,125,506.18

I had concluded that: “So in conclusion, if a couple is able to accumulate $2.12 Millions dollars, they would be able to retire at 50 years old with pretty comfortable life-style!
Note that I have not taken CPF Life payout (starting at 65 years old) into account, so in practise a couple need less than $2.12M to retire comfortably if you take into consideration that they will be receiving $1300 pm for man and $1200 pm for women starting from the age of 65 years old!

Ok, so the issue here is now regarding CPF Life payout.
I have friends enquiring about whether I can also factor CPF Life payout into account in my retirement savings calculator, since CPF Life (which is a form of life-time annuity scheme) is now part and parcel of every retirees in Singapore!

I am glad to say that I had managed to include not only CPF Life payout but also effect of inflation and also considering bequest (i.e. the amount you want to leave to your heirs) into my Retirement Savings online calculator!  You can access my Retirement Savings + CPF Life (+ Inflation + Bequest) Online Calculator here:
    https://make-money-secrets.blogspot.sg/p/retirement-savingscpf-life-calculator.html

Let’s just try my Retirement Savings + CPF Life (+ Inflation + Bequest) Online Calculator by keying in the following parameters:


Amount you would like to withdraw each month in retirement ($): 6,000.00
Annual Interest Rate you expect to earn on your savings (eg key in "3" for 3%): 1.0
Age you would like to retire (Years Old): 50
Amount you want to leave to your heirs (bequest) ($): 0.00
Annual living Inflation Rate you expect (eg key in "2" for 2%): 1.0
CPF Life Payout Amount per mth ($): 2,500.00
CPF Life Payout starting Age (Years Old): 65
Age you expect to live until (Years Old): 85

Then, you can click on “Calculate” and the online calculator will give you the output as:

This is how much you need to have saved by the time you retire (before inflation) ($): Calc.  
$1,525,506.18
This is how much you need to have saved by the time you retire (inflation-adjusted) ($): Calc.  
$2,064,000.00

So, we can see that in order for a couple to retire at 50 years old and to have $6000 per month for retirement (for both’s expenses), you need to save $1.525M (before inflation) and if you factor in inflation (assuming just 1%), you would need to save $1.920M!

Note that I had made following assumptions:
Assume that both the couple retiring at 50 years old will live only till 85 years old.
Assume that CPF Life payout for the couple is $2500 per month (being $1300 pm for men and $1200 pm for women if both have the Full Retirement Sum of $161,000 at 55 years old) and that these figures (hopefully) will not be lowered in future.
Assume that inflation is only 1% (which is on the low side, a more realistic figure should be 2% as used in CPF Escalating Payout plan).
Assume that the interest/return you would get for your pot of savings to have an average of 1% (which is also on the low side, and I think a more realistic figure can be 2% and above if you have >$1M to invest).

You can play around and change the parameters to those values that suit your situation and you can then plan your own retirement!

With my Retirement Savings + CPF Life (+ Inflation + Bequest) Online Calculator, now you can plan your own finances independently without needing the help of financial planners! (Beware of financial planners! – because some are all out to sell their products rather than to help you plan your finances and advise you appropriately for your retirement!)

Again, you can access all the online calculators that I have developed from this web link URL:
    https://make-money-secrets.blogspot.sg/p/my-online-calculators.html



Saturday, October 15, 2016

People who are doing useful/meaningful/important work that benefit the mankind & society have not being paid commensurately


It seem that in the past >10 years, some very unhealthy development has been happening in Singapore, and in many parts of the world.  The development is that:
          "People who are doing useful/meaningful/important work that benefit the mankind & society have not being paid commensurately!"

We are seeing these development when we see that engineers who are doing jobs to repair and maintain the aeroplanes, the MRTs, the buses, developing products that will save life or to help people to have better life etc are being paid a salary that have not increased as much as inflation over the past many years, while people who are doing what we would regard as "useless" jobs are racking in huge incomes, like traders, "pushed" salesmen (trying to sell things to force us to buy when we don't really want or need), and people trying to persuade others to join their MLM companies, and the many middle managers and administrators (don't know have so many layers of "managers" for what?)

E.g., a corporate commodities trader, their job is to hedge against the company's physical commodity prices, yet I heard (from a friend working in commodity firm) that many such traders are really engaged in speculation rather than hedging.

Then there are the "pushed" salesmen getting a big cut of commission when their service are not really needed, like the insurance agents (like "salesmen") selling insurance in Singapore.  This has come to such bad shape that MAS, Singapore Monetary Authority of Singapore (the equivalent of Central Bank in other countries), having to step in and dictate by law that insurance companies must have direct sales channel to their potential customers to cut out these insurance salesmen who are not needed (if these people do not require the insurance agents advise).  I abstract part of the news article as below:
"
People in Singapore will be able to buy certain types of life insurance products directly from insurance companies starting next year, saving on commissions. This is according to the Monetary Authority of Singapore (MAS), which said on Wednesday (July 30) that all insurance companies that serve the retail market will have to offer the following direct purchase products:
(a) Term life insurance products with Total Permanent Disability (TPD) cover;
(b) Whole life insurance products with TPD cover; and
(c) Optional critical illness (CI) rider attached to term life or whole life insurance products.

Consumers who wish to buy direct purchase products will still be subject to underwriting by the insurer, MAS said. "When direct purchase products are introduced in early 2015, they will provide consumers who do not require advice with cheaper access to selected life insurance products," Mr Lee Boon Ngiap, Assistant Managing Director for Capital Markets at MAS, said in a statement. "Consumers will benefit from the greater price competition that will be introduced between the direct and commission-based channels." 

"

Remember the SMRT trains keep breaking down saga?  Why would the trains keep breaking down or keep getting delayed etc? One of the main reason (I heard) was that the engineers in SMRT had previously been treated as people who only “costs” SMRT money, since they only incur costs by maintaining the trains and tracks and equipments etc BUT do not help to bring in REVENUE! As such, they have been treated badly so much so that many knowledgeable, experience and skilful engineers left, which then led to SMRT trains keep breaking down etc while the remaining engineers (who are not as experience, knowledgeable and skilful) are unable to resolve the problems!

Things have become so bad that after that we read on the news such as:
Government to hire 1,000 engineers this year”… “It will review salaries to match market rates, provide training and leadership grooming

Singapore needs more engineers, less short-term planning

New rail transformation advisor named amid 'serious refocus' on engineering

Engineering focus needed to help get Singapore's tech talent to return home, says PM Lee

S'pore 'must value engineers the way Silicon Valley does'

However, the most important question the Government and companies (especially Government Statutory Boards and GLCs) have to ask themselves is this:
If you can’t even keep your existing tech talent (like those of SMRT knowledgeable and experienced engineers), then what makes you think you can persuade tech talent currently living and working overseas to come back to Singapore?

Sunday, October 9, 2016

Retirement Savings Calculator Online - How much do you need to save before you can retire?

Ever thought of retiring early? (Yes, early, like at 50 years old, and not at 65 years old!)

Ever wonder how much you need to have before you can retire?

Have you started planning and figuring out what is the total amount of savings you will need before you can retire?

As a general guide, in order to calculate how much total amount of savings you will need before you can retire, you need to have an idea of how much you need to spend per month during retirement. Also, you would need to estimate how many years you will spend in retirement before you pass away and how much your accumulated capital can still grow while they are being draw-down.

In my previous post, as can be seen here,

I estimated that a very basic no frail cost of living in Singapore for a couple would be about $1,348.00 per month, or $674 per person per month (I assume rental costs to be $0 because I assume the couple has a fully paid property).  

I have made available a “Retirement Savings Online Calculator“ here:

where you can calculate how much total amount of savings you will need before you can afford to retire.

 Let’s start again with the couple who can survive with very basic no frail cost of living in Singapore for just $1,348.00 per month, so how much would the couple need if they wish to retire at 50 years old?
Ok, using my online calculator, you need to key in the following:

Amount you would like to withdraw each month in retirement ($):  1348
Annual Interest Rate you expect to earn on savings (in dec., eg 0.03 for 3%):  0.01
Number of years you would like to make monthly withdrawals:    35 
 
Then, you can click on “Calculate” and the online calculator will give you the output as:
This is how much you need to have saved by the time you retire ($):   $477,530.39 

So in conclusion, the couple would need about $477 Thousand dollars to be able to retire at 50 years old for a basic no frail cost of living!

Note that in the above, for erring on the safe side, I assume:
(a)    The interest rate you would expect to earn on your savings to be just 1% (something like just fixed deposit interest rate).
(b)    The age by which the last of the couple can live till passing away to be 85 years old (since average age of man is only 80 while average age of woman is 85), so the “Number of years you would like to make monthly withdrawals” = 85 – 50 = 35.

Next, let’s calculate for another scenario, this is the one which most Singaporeans would like to have, a comfortable retirement (not luxury) life-style which most Singaporeans would deem to be pretty good enough for them!

According to Singapore’s household income statistics 2014 (from http://www.singstat.gov.sg/), your household would be top 20% earners if your household income is about $14500 and above.
Also, according to Singapore’s household expenditure statistics 2013, household with that kind of income spends on average about $7000 per month. However, this $7000 pm figure includes spendings on kids and/or parents, so I would say a figure of $6000 per month for the couple’s retirement would allow them to maintain their comfortable life-style.

Ok, using my online calculator again, you need to key in the following:

Amount you would like to withdraw each month in retirement ($):  6000
Annual Interest Rate you expect to earn on savings (in dec., eg 0.03 for 3%):  0.01
Number of years you would like to make monthly withdrawals:  35 
 
Then, you can click on “Calculate” and the online calculator will give you the output as:
This is how much you need to have saved by the time you retire ($):   $2,125,506.18

So in conclusion, if a couple is able to accumulate $2.12 Millions dollars, they would be able to retire at 50 years old with pretty comfortable life-style!

Note that I have not taken CPF Life payout (starting at 65 years old) into account, so in practise a couple need less than $2.12M to retire comfortably if you take into consideration that they will be receiving $1300 pm for man and $1200 pm for women starting from the age of 65 years old!

Also, for somebody who has $2.12M, they can afford to invest diversely and probably can get much better return than 1% from fixed deposit!

I have also made available some other online calculators which you may find them useful, and you can access them at this webpage:

Can Citibank unilaterally increase SIBOR loan’s spread? (8) – Citibank goes scot-free, because MAS and CASE unable/unwilling to do anything


The afore-mentioned case regarding Citibank unilaterally increase SIBOR loan’s spread is interesting indeed!  Is this even allowed?

According to the news, there are Citibank’s customers whose property loan contract agreement has agreed term stating that their loan interest is “SIBOR + 0.70%”.  However, now Citibank has unilaterally changed the property loan interest they charge to “SIBOR + 0.85%”, thus increasing the fixed spread rate by 0.15%, and thereby dishonouring the agreed term (“SIBOR + 0.70%”) in the main contract agreement!

Let’s Look at the most crucial terms of the Citibank’s loan mortgage agreement again:

"
(d) Contractual period 1 (for 1st year from date of disbursement) - 3 mths Sibor + 0.7%
Contractual period 2 (Thereafter) - 3 mths Sibor + 0.7%

(e) The minimum effective interest rate shall be 0.8% p.a.. Interest rates are all subject to review and may be adjusted from time to time depending on prevailing market conditions. The bank will not be giving advance notices to the Borrower for any changes in the interest rate.
"

Does the wordings above state that Citibank can unilaterally change the “0.7%”, which is a fixed number in the mortgage loan agreement, to anything else they like? (Note that the 0.7% is usually also known as the “spread”).
I don’t think so!

However, some people believed that Citibank is actually unilaterally invoking their “catch-all” clauses in their “Terms and Conditions” to change the property loan interest they charge “SIBOR + 0.85%”, thus increasing the rate by 0.15%, and thereby dishonouring the agreed term (“SIBOR + 0.70%”) in the main contract agreement!

If this the case, it doesn’t look fair-play to me too, considering that the main contract agreement is what had been agreed by the bank, and few consumers will look through their accompanying terms and conditions documents that run for 10-15 pages that are super wordy, in very small fonts (old people can’t even read them!), and written so cryptically and full of legal jargons and catch-all phrases that there will always be some clauses in these Terms and Conditions that contradict the main contract agreement!

Because of this news, I went to take a look at my property loan main agreement and when I looked at the bank’s “Terms and Conditions” document, I shook my head!  It runs for something like more than 10 pages in super small fonts and I feel that my eyes are very painful to read them, not to mention that they are so general and ambiguous (to me at least) and catch-all for the banks that the banks practically can interpret in any way to their advantage!

After so many complaints and big hoo ha, what is the final update?

Well, at the end of the day, it seems that there it goes, Citibank goes scot-free (because MAS and CASE who are supposed to be helping their citizens (from unfair financial dealings) and consumers (who are supposed to fight to protect consumers against unfair trades under “Consumer Protection Fair Trade Act”) said they are unable to do anything about it)!

Really??? MAS cannot do anything to banks under their supervision even if they engage in unfair trading practise and dishonour their contractual agreement???

Saturday, October 8, 2016

Can Citibank unilaterally increase SIBOR loan’s spread? (7) – Citibank engaged in unfair practise? Netizens' demolition of Citibank’s justification...


http://singaporelegaladvice.com/unfair-contract-terms-act-ucta-in-singapore/


In the case of a consumer dealing with a business entity, if the transaction is entered into using the latter’s standard form (for instance, when you sign up with a telco on their standard contract), section 3 applies. This section disallows the business from using its standard contractual terms to: 
  • Exclude its own liability for breaches of terms;
  • Excluding or limiting its own liability for breaches of terms, and
  • Relying on a term to render a different kind of service from that which was reasonably expected of him, or not service at all,
unless the standard contractual term is reasonable. Once again, reasonableness rears its amorphous head!
"
"
Is Citibank term/action "reasonably"? I believe that is also implicitly in the reply from MAS on this issue.
Citibank did not explain, just says the term in the contract. Is this term "unfair"?

And more comments that point to loophole in Citibank’s argument they have right raise the loan spread unilaterally: 
That was already mentioned in the news
"Mr Peng said all the terms and conditions have been carefully outlined and that interest-rate definitions are clearly stated.
He encouraged affected customers to contact the bank, adding that any decision they make regarding their loans will not be bound by any penalty or fees."

My 2cents:

There is a clause in the Citibank Main Contract.
"The Citibank Home Saver Terms and Conditions annexed hereto shall apply. In the event of any inconsistency between the terms herein and that set out in the Citibank Home Saver Terms and Conditions, the terms herein shall prevail."

What does that mean? it means The Main Contract will override the Annex if there is any inconsistency.
So Citibank cannot be relying on the catch-all clause in the T&C (the Annex) to change the spread because the Main Contract already specify the spread. Catch-all clause also no use if inconsistent with Main Contract.
Remember this: Main Contract will override the Annex if there is any inconsistency.

To change the spread, Citibank need to rely on the Main Contract, and not on the Annex.
The clause citibank are using is in 1(e) The minimum Effective Interest Rate shall be 0.80% pa. Interest rates are all subject to review and may be adjusted from time to time depending on prevailing market conditions. The Bank will not be giving advance notice to the Borrower for any changes in the interest rates.

Now there are 2 terms: "Interest rate" and "Effective Interest Rate" used in Clause 1(e)
Definition of "Effective Interest Rate" is 1 month SIBOR rate for the relevant Interest Period plus 0.65%

What then is the definition of interest rates?
The nearest definition comes to:
"The actual monthly payment shall be computed based on the Effective Interest Rate set out below and may vary depending on amongst other factors the prevailing interest rate, outstanding principal and remaining tenor of the Credit Facilities. The interest rate quoted to you is benchmarked against the Singapore Interbank Offered Rate ("SIBOR") and is accordingly subject to any fluctuations in SIBOR rate. Please note that the Bank is not required to give advance notice of the SIBOR rate which are applicable to the Term Loan."

Do you see how the the last sentences in Clause 1(e) and the above paragraph are similar.
Clause 1(e): The Bank will not be giving advance notice to the Borrower for any changes in the interest rates.
Above paragraph: Please note that the Bank is not required to give advance notice of the SIBOR rate which are applicable to the Term Loan.

Now do we have the definition of what is "Interest rate" ? 
The case to be made is that "interest rate" quoted in Clause 1(e) is that it is the 1 month SIBOR rate and NOT the spread.
so clause 1(e) can read as: 
1(e) The minimum Effective Interest Rate shall be 0.80% pa. Interest rates/(1month SIBOR rate) are all subject to review and may be adjusted from time to time depending on prevailing market conditions. The Bank will not be giving advance notice to the Borrower for any changes in the interest rates/(1month SIBOR rate).

If you demolish 1(e), there is less wriggle room for citibank to change spread.
Come to think of it, which is why perhaps they are relying on word games, like:
"Mr Peng Chun Hsien, Citibank Singapore's head of secured finance solutions, also stressed that the "current revision is only applicable to clients outside the lock-in period".
"Mr Peng told The Straits Times: "The word 'throughout' is a term the industry uses, and refers to the tenure and period that we are covering."
"Finance industry experts say reviewing spreads is standard bank practice, but in practice, changing the spread during the loan period is uncommon."

to AMK and the rest affected, 
1) please check with your friend's contract are similar to mine, i also have citibank letter of offer 
2) please ask your friend to ask the banker to point out which clause they are using to change spread. This is very important. Insist on finding out which clause. Take no shit for an answer.
3) remember, in any consistency, Main Contract overrides Annex (T&C) if there is such a clause in your friend's contract.
 “

again, there are 2 terms used "Effective interest rates" and "interest rates" used in contract.
"effective interest rates" is NOT EQUAL to "interest rates"!

from the para
"The actual monthly payment shall be computed based on the Effective Interest Rate set out below and may vary depending on amongst other factors the prevailing interest rate, outstanding principal and remaining tenor of the Credit Facilities. The interest rate quoted to you is benchmarked against the Singapore Interbank Offered Rate ("SIBOR") and is accordingly subject to any fluctuations in SIBOR rate. Please note that the Bank is not required to give advance notice of the SIBOR rate which are applicable to the Term Loan."

clause 1(d) already have formula for Effective Interest Rate
Effective Interest Rate = 1 month SIBOR rate for the relevant Interest Period plus 0.65%.

if they wanted to use clause 1(e) as basis for change:
it should have read as
1(e) The minimum Effective Interest Rate shall be 0.80% pa. Effective Interest rates are all subject to review and may be adjusted from time to time depending on prevailing market conditions. The Bank will not be giving advance notice to the Borrower for any changes in the Effective Interest Rates.

If the bank has used the above terms instead, then i think citibank has all the rights in the world. unfortunately it omits the word Effective.
What mortgagees are paying is the Effective Interest Rate, and not the Interest Rate. Dont mixed up the 2 terms.
and formulation of "effective interest rate" is in clause 1(d) (mentioned above)

once again, like a broken tape recorder, those affected please ask the bank(er) to point out which clause they invoke to change the spread.

The way I see it is that Citibank is playing with words, and is oppressively trying to mislead their clients into believing they have the right to raise the spread unilaterally. There is clear violation of CPFTA, yet CASE and MAS are both not doing anything!

1) I don't believe Citibank has right to hike the spread. You may want Citibank to point out which clause in your Mortgage Loan Contract they uses to justify to hike the spread.

an update on this story. 
to hopeful: according to my friend, yes, Citi insists that "interest rate subjected to change" is the one that allows them to change the spread. I dun know if he will use your argument to play with words with them. but he is already doing refinance now so he doesn't care much now.

He gave me the MAS email details. You all can write to MAS directly: consumers@mas.gov.sg, attention Chan Wei Sze who is the "case officer". (I did. This is public interest. )

to gavan: collective loan deal is not doable. each one has his own relationship and preference for a bank. these are not homogeneous "fungible" products. the real issue here should be to get MAS to "deal with" Citibank, for everybody's interest.

Btw I'm actually quite surprised no ST Forum articles on this subject appeared. I am sure many ppl wrote to Forum. If Today can publish, why not Straits Times ?

It is a pity. Personally  i think citibank has a rather weak case (not that i am a legal eagle). since mortgagee is paying "effective interest rate" rather than "interest rate" and formula for "effective interest rate" is already well defined as 1 month SIBOR + 0.65%.
And what is 0.65%? Is it "Interest rate"? That is highly questionable.
as mentioned earlier, the only definition of "interest rate" in LOI is:
"The interest rate quoted to you is benchmarked against the Singapore Interbank Offered Rate ("SIBOR") and is accordingly subject to any fluctuations in SIBOR rate".
so 0.65% is not the "interest rate". 
SIBOR rate is the "interest rate" and are subject to change (ie subject to any fluctuations in SIBOR rate), not the 0.65%.







The rule of the game is to get an OFFICIAL reply from Citibank (in black and white) on which clause they specifically use to change the spread (don't take verbal reply)!
"
my friend got a letter by post telling him it is that clause ("interest rate subjected to change"). it's very official.

As hopeful said, and I agreed, that fixed figure say "0.60%" cannot be the "interest rate" that they referred to that they can change, since SIBOR is the actual interest rate that can change, so if they insist that that particular clause refers to "0.60%" which they can change rather than SIBOR (which almost all of us will interpret as such), then it is obviously a very weak argument. A fixed spread is a fixed margin, their profit margin, it is not an "interest rate"! Citibank want to bullshit who???????