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IF Interest Rate up Tomorrow, are you sweating now?

Posted in Bank Negara Malaysia (BNM), Malaysian economy, Personal Finance, and Property related

There has been many predictions about Bank Negara hiking the interest rate which is at this moment is still considered very low. Assuming, this really do happen tomorrow, should you be sweating now? I think, for the 86% who owns just one mortgage loan in Malaysia today, it is not likely that they would be sweating. Assuming you have a RM500,000 loan today, with 4.25% interest rate and a 30 year term and the interest rate goes up 0.5% tomorrow, you would have to fork out an additional RM133.73  Table as follows: calculator

Oh yeah, did I mention that majority of all analysts are saying that it’s only a 0.25% hike and it may or may not happen tomorrow. What an accurate prediction. ‘It may or may not happen tomorrow’. 🙂 Would it slow down the property transactions further? Well, it might, if everyone is very negative about it. Anyway, RHB Research said that from the third quarter onwards, we should see a better set of numbers. It gave  a few names of property developers which are selling more homes. They are Tambun Indah Land Bhd and Matrix Concepts. Besides that, loan approvals has also started to move up since late first quarter.

Actually, my friends in the industry are still saying that many agents are today struggling. Reason being, every buyer is so much more cautious and is checking everything and researching everything since information is readily available. Some even stopped their purchase when they learnt of dengue cases in the condo they were about to buy!

The bad thing about slowdown is, everyone is negative about it. My friends, my colleagues, many kopiandproperty.com readers said the same thing. The good thing about slowdown is, after the slowdown, as long as the economy does ok, it will start to inch up. Malaysia is too young a country to have reached maturity. Definitely not yet.

written on 9 July 2014

Next suggested article:  Upward pressure on house prices are due to structural factors – BNM

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8 Comments

  1. Ang
    Ang

    Hi Chialih,

    With the announcement of 0.25 hike in interest rate, it is unlikely to have any impact to those with one mortgage loan, the property price is likely to up trend if economic is retain good, you are right, however, to those owners who had rushed to sell off their property in 6 months ago because of the OPR rate concern, if they would wait after the announcement, it makes a difference and act wisely for getting higher selling price instead.

    What do you think?

    July 11, 2014
    |Reply
    • Haha. Good reasoning. True. However if they had sold off earlier they may have also gotten new returns if they invested wisely. Don’t worry too much about obstacles. Stay focussed on your goal all the time. It is likely that interest will still go up, should you keep your money or buy? That’s a question only you can answer. Don’t let anyone push you towards any answer.

      July 11, 2014
      |Reply
      • Ang
        Ang

        Hi Chialih,

        You are right,it is the matter of future, none of people could predict what is going to happen, there is always a risk to be taken for either way of decision. you are correct, stay focus on the goal and move forward, as a coin always has two sides, there is no right and wrong but suitable.

        July 11, 2014
  2. Dee
    Dee

    Sorry, my comment is unrelated to interest hike.
    I feel there is a glut in respect of flats in Penang. Chialih, what is your opinion?
    You commented in Penangpropertylover’s blog that Sungai Ara is your favourite
    Why is it Sungai Ara? Thanks.

    July 12, 2014
    |Reply
    • Hi Dee, there is definitely a glut for the high end condos in Penang today. Many empty units at night. Why Sungai Ara is just a personal opinion. Top reasons include it’s near to everywhere but it’s not right beside the action. Places where there are huge jams right beside your home? For example, Queensbay. For example, Jelutong. For example, Gelugor. Sungai Ara is also a new area which meant there’s lots of rooms for growth. If you buy in a matured area, the pricing is already at a premium. If it goes even higher, then its purely speculative, nothing more. I also like Sungai Ara just like majority of non Penangites which does not have any history of staying in certain areas their whole life. Sungai Ara, when my father was studying in USM was still a secondary forest. Hope this explains.

      July 12, 2014
      |Reply
  3. Kin
    Kin

    I’m not a fan of property investor but i think is one of the less risky invesrment instrument provided calculated risk is taken care of.

    Personally, i think the price is a bit overprice because i think the property price is not affortable for average paid salary workers.

    October 27, 2015
    |Reply
    • It’s only less risk if we know what we are buying. Truth is, for many, it’s a huge risk because they buy where people are telling them buy….

      October 27, 2015
      |Reply
  4. asali
    asali

    Agreed with Kin to-date market some are overpriced property. But the truth is like what Charles commented you have to know what you are buying.

    October 27, 2015
    |Reply

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