Elvin Fernandez, the managing director of property valuation firm Khong & Jaafar, has expressed concern over the recent hike of the overnight policy rate (OPR) by 25 basis points (bps) by Bank Negara Malaysia. According to him, this increase will cause Malaysians to experience the strain of paying higher property loan instalments, further contributing to the existing cost-of-living crisis.
“People with mortgages for houses worth RM500,000 will have to pay more than RM100 extra (for their repayment), and those with houses worth over RM1 million will have to pay over RM200 extra,” he said.
He also mentioned that the move could potentially worsen the already-existing property overhang situation. Fernandez further explained that the hike in interest rates could discourage potential homebuyers from making purchases due to the increased cost of loan repayments.
Elaborating, Fernandez said individuals with a stable source of income may not face significant difficulties due to the increased charges. However, for those already affected by the rising cost of living, the situation may worsen.
“For those who can manage the increasing cost of living and rising mortgage payments, it may not be a problem, but what about those who cannot? Will they be able to endure?” he expressed his concern.
Meanwhile, Center for Market Education fellow Consilz Tan said the OPR increase would generally lead to an increase in property prices since the higher interest rates will be directly factored into house prices.
Consilz Tan clarified this could result in a decrease in the number of applications for housing loans as it may discourage “conservative” homebuyers from making investments.
“These conservative home buyers may consider saving more (money) instead of investing in a property,” she added.
The central bank, BNM, made a surprising decision by resuming its monetary tightening policy and increasing the OPR to 3% yesterday. This marks the fifth increase in the OPR since May last year, with a total increase of 125 basis points or 1.25%.
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