Lower mortgage rates to drive up property transactions. Does this work?

Lower mortgage rates to drive up property transactions. Does this work?

If I am given a lower home loan rate, I will be very happy because it will lower the monthly repayments for me. What about you? Would you be happy as well? I am sure you would. However, if the question is would I buy another property because the rates are now lower, I am not so sure. Perhaps I would increase my viewing activities so that I could eventually identify a good property to buy.

If I am NOT looking at the property market at all, then a lower interest rate will not suddenly make me become interested to buy a property. This is why in the beginning, a lower mortgage rate may not suddenly increase the total transactions. However, if enough traction is shown, then more people will have the Fear Of Missing Out (FOMO) and well, that’s when the sudden increase happens. Let’s continue to follow this for the next 6 months to see what happens.

Article in globaltimes.cn. China’s central bank on Tuesday unveiled a new package of monetary measures, led by significant reductions in existing mortgage rates, in a bid to rejuvenate the country’s real estate market and fire up consumer spending.

Pan Gongsheng, governor of the People’s Bank of China (PBC), announced during a press conference on Tuesday that the central bank will guide lenders to cut existing mortgage rates on home loans by an average of 50 basis points (bps) and lower the minimum down payment for second-home loans nationwide from 25 percent to 15 percent.

These easing measures will have a strong impact on the market, and they are expected to greatly enhance activity by driving up housing transactions during the upcoming peak real estate season in October, contributing to achieving this year’s economic growth targets, experts said.

The rate cut is set to benefit 50 million households and 150 million people, leading to an average annual decrease in household interest payments of about 150 billion yuan (equivalent to about $21 billion), Pan said. Do read the full article with a lot more info here: Article in globaltimes.cn.

Dropping interest rates have started, economic growth should show positive signs

We just need to look at what has happened to the ringgit after the US Federal Reserve cut their rates. When the rates go lower, investors have to look elsewhere for potential investments. Malaysia which has been out of radar for a while is now seen as attractive. Many analysts are now saying positive things about Malaysia and well, all the forecasts are showing the ringgit being able to maintain if not appreciate further in 2024.

Let’s be happy and let’s hope the world economy continues to grow which meant more people needs more goods and services. As an exporting country, Malaysia will definitely benefit from this demand too.

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