Property Investment 101: Rising interest rate is a worry for homeowners. Will rates be rising?

Property Investment 101: Rising interest rate is a worry for homeowners. Will rates be rising?

Once upon a time when rates were much higher than today

Once upon a time, when I bought my first property in 2003, the interest rate I was charged was around 6.75 percent. Just look at the chart below for some idea. Yes, you can also be very alarmed by the property buyers in 1998 when the rate went up to close to 14 percent…. Take a look at the calculation right below this chart on interest rate.

Actual calculation of the home loan based on just RM250,000 in 2002.

If you want to pay almost the same monthly repayment today?

As the interest rate is lower today, one is able to afford to buy a more expensive property versus in 2002.Around RM90,000 more expensive. We are only using an example of a property price which is considered affordable. If we are to look at RM500,000 or higher, we would notice the huge difference in repayment with a different interest rate.

Now that we know interest rate plays an important part, is the interest rate moving up?

Good news I think? I tried to read a bit online and following are the news I get. Actually bad news for those with Fixed Deposits yeah. There are no good news for them. For home owners, yeah, the good news is that nothing much will change for 2024. Please do read the below on what the analysts are saying when it comes to interest rate here in Malaysia

Low interest rate cannot last forever, it’s always a cycle

When the economic situation is not vibrant, the central bank may want to keep rates low in order to spur investments versus people leaving their money in the bank. When the economy is rising fast, the central bank may increase the rates so that speculative investing is kept out as much as possible from the market. In other words, when times are bad, rates may be lower and when times are good, rates may be higher. So, we need to be wary of what we wish for. Always low rates? Not good news. Always high rates? Oh… home repayment is so high…
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