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New OPR will have little impact

July 11th, 2014 Leave a comment

An increase of 0.25% in the overnight policy rate (OPR) will not have a significant impact on borrowers for low-cost and affordable housing priced between RM45,000 and RM450,000, according to a senior executive of a real estate agency.

VPC Realtors (KL) Sdn Bhd director James Wong said tere would only be an estimated marginal increase of RM5 to RM53 per month in loan repayment compared to the previous interest rate for a 30-year tenure with a 20:80 margin (see chart).

“As for high-end residential properties, most buyers are either cash buyers or they buy with a minimum loan margin. Hence, an increase of 0.25% per annum will be insignificant,” he added.

Bank Negara has raised the benchmark overnight policy rate by 0.25% to 3.25%, the first rate hike since June 2011.

Mortgage rates are based on the base lending rate (BLR) which in turn is correlated to the central bank’s OPR.

Wong felt that speculators would be hit the most.

“If they are unable to service the loan, they will be forced to sell. But it will not be as easy as before due to the real property gains tax,” he said.

Wong did not expect rental rates to be impacted by the increase in interest rate as the rental market was primarily determined by demand and supply.

Property consultants expect fewer transactions as mortgage rates will rise in tandem with the interest rate.

Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector president Siders Sittampalam said: “With the interest rate hike, we expect a gradual fall in volume.”

That said, property prices will still be driven by demand and supply.

Source: StarProperty.my

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  1. IsaacTan
    IsaacTan
    July 11th, 2014 at 21:44 | #1

    Everything also said no significant impact but does the gov know actually everything add up!

  2. Elmo
    July 11th, 2014 at 23:35 | #2

    Public bank already issued notice effect from 16 July BLR is 6.85%.

  3. Elmo
    July 11th, 2014 at 23:39 | #3

    SG only sibor+0.75%= 1.xx% only. Current Sibor rate is 0.3x. Speechless about Bank Negara Malaysia and gov. Salary so low and inflation so high.

  4. IsaacTan
    IsaacTan
    July 12th, 2014 at 00:46 | #4

    Without a Gov that always think for citizens, things will keep going up and residents will continue suffering.
    Could refer to those countries where the Gov dictated and hold power for very long….All of them are loaded but the residents are suffering.
    Pray and hope Malaysia could put their citizens first…….

  5. twitty
    July 12th, 2014 at 09:57 | #5

    @IsaacTan

    If the gov wants to take good care of the people, they have to take good care of the economy. In order to take good care of the economy, interest rates have to be aligned to fundamentals.

    You need to educate yourself with basic economics knowledge my friend (looks like you’re lost), it’s good for you in the long run, and it helps in your investment strategies moving forward.

  6. IsaacTan
    IsaacTan
    July 12th, 2014 at 10:22 | #6

    @twitty
    We all don’t mind if they really looking after the economy.
    But how much malaysian money they have sapu into their pockets? How many Handbags and diamond rings they have bought?
    If they have manage the country well in Day 1 i do not think the country will be at this stage now. Malaysia is a very unique place. We have natural resources, we have timber, we have a country with no major disaster and etc. I believe if it falls on good hand, good things will turn out.
    Maybe my economics knowledge was very low as i dont study it but i have stayed in Malaysia for more than 20 years and i see things that are sad on how they run the country.
    Anyway the increased had been a fact. Just pray for the best for the future undertaking.
    Just my 2 cents on this topic…..

  7. twitty
    July 12th, 2014 at 11:02 | #7

    @IsaacTan

    Hahaha…..If I were you, I wouldn’t confuse myself by jumbling BNM, diamonds, interest rates, and handbags! You might also want to consider acquiring some objective analytical skills to help in your investment decisions.

    If you have some spare cash in hand ( I hope you still do after the OPR increase), take some time off to visit other countries, you will then realize there’s no perfect country, each has it’s own issues.

    After that, ask yourself, are you going to blame all your misfortune on someone else not running the country to your “standard”, or start thinking what you can do now to improve your own situation…:)

    Grab yourself a book on “thinking skills + economics 101 for the dummies” might be a good start for you. Stop whining, Start reading!

  8. kroos
    July 12th, 2014 at 11:13 | #8

    interest hike proves that demand is still strong. Gov want to slow down the demand.

  9. IsaacTan
    IsaacTan
    July 12th, 2014 at 11:37 | #9

    Thanks for all the advise!

  10. Brandonlsy
    July 13th, 2014 at 14:38 | #10

    Referring to the statement above
    “An increase of 0.25% in the overnight policy rate (OPR) will not have a significant impact on borrowers for low-cost and affordable housing priced between RM45,000 and RM450,000, according to a senior executive of a real estate agency.”

    Do you know an increase of 0.25% will also prolong your tenure for many months IF you are STILL making the SAME AMOUNT in your monthly repayment?? This will depend on how big is your loan.

    If your monthly repayment is RM2474.36, an increase of 25 months, you will have to fork out your hard earn money of RM61,859.00. What happen if early next year the bank impose another increment of 0.25% again?

    Lucky for me, I know how to manage it when the BLR increase, all I need to do is to pay the correct amount and I am able to save at least 50% of my interest and also SHORTEN 50% of my tenure.

    If you want to know how I am able to do it, can get in touch with me too.
    0111 6297118 Brandonlsy

  11. Lim
    July 13th, 2014 at 22:09 | #11

    Gaining of rpt to 30%!! No more dibs!!! Repayment shorter for 45 years to 35 years!!! Bank loan base on nett income!!! 6% GST coming!! Now again increase interest!!! This is crazzzzzzy!!! All happen between a year!!

  12. Tan
    July 13th, 2014 at 22:39 | #12

    @Lim

    Not crazy lah. The gov should continue to impose anti speculation measures on properties until desirable results are seen. That’s how Spore gov did it. Measure after measure.

  13. IsaacTan
    IsaacTan
    July 14th, 2014 at 03:58 | #13

    @Tan
    SG gov implement Additional Buyer Stamp Study (ABSD) that taxing those people getting extra units. But this increase of interest apply to all even 1st time buyers.
    SG interest just 1+% compare to Malaysia 6+% and of course Malaysia is better compare to Indo that is close to 10%.

    @Lim
    Some people said stop whinning….and mentioned gov have nothing to do with it woh……

  14. Tan
    July 14th, 2014 at 10:49 | #14

    @IsaacTan

    Yes, there’s a limitation to which interest rates can be used in controlling housing price, and like you said, interest rates affects other sectors as well, mainly businesses. So BNM could use a combination of interest rates + other measures (eg. ABSD, further increase RPGT, and various others taxes).

    Spore has shown us that it is possible to intercept housing price and yet not cause a financial crisis. That’s good reference for us.

  15. IsaacTan
    IsaacTan
    July 14th, 2014 at 11:22 | #15

    @Tan
    Totally agreed. If the purpose is to avoid speculation, tax those who’re getting more units.
    Shouldn’t it be a more direct and effective ways?
    Increasing the interest rate affect not only speculator but it also affect first time buyers and youngster that desperately wanted to get their first unit.
    But there’s some people saying it was for the seek of ensuring the economy was in good shape woh….. Will leave this to all the economist specialist
    Let’s hope the best for Malaysia future undertaking…….

  16. Spiderman
    July 14th, 2014 at 18:40 | #16

    Govt tries to introduce multiple measures to curb escalating household debts and house prices and targets for house prices correction. When house prices are more affordable and more stable, one of the end result is that youngsters don’t need to scramble and rush to buy houses due to mentality and worry that house prices will continue increase too fast and unaffordable, that factor is also the contributor, fuel to the speculation (grap to buy now and think what to do with it later mentality). The approach is short term pain is better than long term sickness. However, my observation is that SG govt is definately more effective in implementation and covers the loop holes better than our govt. Sigh.

    GST is something else, it is not really for house prices control measure, not for anti speculation measure. It is for changing tax system and policy.
    Yes, let’s hope (and pray also) for the best for Malaysia future undertaking.

  17. cicakman
    July 14th, 2014 at 23:42 | #17

    @Spiderman

    Spore is a small country. Most policies are relevant “nation-wide” and can be applied to the whole country. Whereas the situation is different in Msia.

    Case in point, house price in Msia. There’s no issues in Kedah, Perlis, Kelantan etc. Main problems only in Klang Valley, Penang & maybe JB. Local gov must be proactive enough to intercept speculation. Local gov should know the local situation best. PG gov has introduced some measures, but I think they can do better with more specific smart measures.

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