Quite the contrary, banks make the bulk of their profit during the first half of your loan tenure
e.g if you borrow for 20 years, your bank would have taken > 2/3 of their profit in the 1st 10 years.
This is due to the unfair way the loan is ammortised - in the 1st 10 years or so, the bulk of your payment goes towards servicing the interest/profit

That's why if you notice, many banks have reduce the lock-in period, to encourage flipping
It is more profitable for the bank if you refinance/sell within 5 - 10 years to free up the principal for them to catch the next waterfish

The long tenures being offered are just part of the bait to get you hooked........

I just applied for a loan and when I told they bankers/agents I will be servicing it till the 'end' they all looked at me in disbelief

Yes I am buying even though I think market is going to flat --> dip --> some crashes in 3 years
For own stay. Also getting old. When you get old, tenure goes down, MRTA goes up up up like rocket.
So wait if you are young and can wait, but don't wait too long. Wait also got costs.

Just make sure select carefully, don't panic buy, and got enough survival margin

But am saving a bit of cash, as I think there will be some ikan bilis to catch in 2-3 years time

US is a 'consumer driven economy'.....they were 'conditioned' to spend like no tmoro. Everything on credit.

Part of the housing crash was triggered by people borrowing more money by 'unlocking equity in house'

Say buy house in 2003 at US100K. In 2006 house price climbed up to US200K (up up up like M'sia)
Your bank will actually come knocking offer you a 50K personal loan because your 'house value has gone up'.(You got money, man. Spend-lah)
So take and spend - new car, holiday, swimming pool

Then come 2007 house price crash. Die standing with mouth wide open.

Good thing this not popular yet in M'sia. Won't crash so fast?

Actually, this is also a sign that things are heating up too much too fast - when you have such runaway optimism.

I live thru the 1998-2002 crisis, and bought a DS link each in 1998 and 2002 (start and end), so I remember clearly how it was then.

IMO, history is repeating itself.

My house hunting started in 1994.
That time in Shah Alam a DS link 20x 70 going for RM128K (section 7, Worldwide Dev's first project)

That time no money for downpayment, so waited to save money. (Just like 2004, houses still cheap)

In 1996, price shot up to 180-200K. Mouth opened like dying fish.
Bukit Jelutong DS link was going for 280-350K. People queue overnight to buy. No joke.
Every launch I go to, big or small project, same answer - "all sold out"
"But if really interested, Mr Wong there got 5 units. Can ask him-lah."
And Mr Wong will be very happy to pass you one unit, at 30-40% premium.
(Just like now.....)

1997, made my big mistake. I PANIC buy a DS link in the outskirts.

3 months later, crisis hit hard, same developer launch next phase at 15% lower price
Remember myself and few buyer got very angry and went complain. Waste time, of course.
In 2000, same house in my row lelonged for 90K. Pity that guy.

1998, subsale DS link in BJ dropped to 250++. Can only watch with mouth drooling.


2002, I sensed the crisis is ending. Went hunting again.
Bought nice DS link, nice location, above average specs, branded major developer - 200K
Similar unit would have cost at least 250K in 1996, at the peak.

2004 economy got better, price start moving up again.
To compare, Denai Alam first launch at end 2004 is 270K, smaller and lesser spec than my 2002 house. But DA got glamour factor.....

Don't know about you all, but for me, Deja Vu......

Lessons learned :
1. NEVER NEVER panic buy. You are feeding the speculation frenzy.
2. If young and can wait, may be good to wait.
However, wait also got costs. Rates can go up, tenure go down, MRTA go up.
3. In crisis, prices in prime area can drop a bit (but BJ did recover faster than the rest)

Lastly,
Let me ask anyone, if I want to learn playing football / soccer? who do I need to learn from?

Ryan Giggs or Jim Carrey (a great actor who knows to act and making jokes)??



[/quote]




I think the key word in the text you highlighted is "unbiased".

---

Added on September 11, 2011, 12:52 am
For those who are seeking advice here for the property market, you are not going to find much unbiased information in this forum.



Sorry, wrong cut -paste. "unbiased information"

Those who want to keep the BBB trend will say BBB
Those who want cheaper house will say burst burst burst.

I am neutral. Just bought third house.

Bought because no choice.

Wifey likes it very much, say must buy or die

Just dropping in to join the fun.

This post has been edited by Fazab: Sep 11 2011, 12:52 AM

Ya-loh, no need to argue. This is only a internet forum. Not that anything we say here will change the market movement. Or govt policy.

Also no need to win personal war.

We put our experience down so that others who are undecided can benefit. Ultimately it is their own decision.


i think at least 4 types of people will read this thread, trying to answer the question "will property price go up further"

Type 1 = flippers. This type no need to worry. Don't need much talking. Will buy anyway. Just need a bit of assurance.

Type 2 = seasoned investor. Also no need to worry. Seasoned = savvy. Come here just to gauge feeling of the market.

Type 3 = new/genuine home buyers. This type is about to make their biggest commitment in life. So want as much good info as possible.

Type 4 = newbie flipper. This type dangerous. Not only big commitment, can land in big trouble if not careful.

We give our unbiased opinion and experience and they decide whether want to use or not.

In the end, it's Caveat Emptor - let buyers beware.

Got holding power and wait for next BBB run?

If happens here in Malaysia, how may owner got such power will decide how bad market goes down.

Property is also 'paper' until you fully pay up the bank.

In any case, any speculative actions is bad for your health during time of impending crisis.
Except for diehard speculators going for do or die
Otherwise best to rebalance portfolio and pay off debts?

Anyway, thread running far off topic......

I was just re-reading this article from the Star last year


http://thestar.com.my/news/story.asp?sec=n.../nation/6900694


Sunday August 22, 2010
Car loan takers top bankruptcy list
By LEE YUK PENG
yukpeng@thestar.com.my

PETALING JAYA: At least 500 people who take out hire-purchase loans for vehicles are declared bankrupt every month.

The majority, comprising 37% (950) of the 2,565 cases in the first five months of this year, were aged between 35 and 44 years. (See Table)

.......


Ok, car loan not same as housing loan. But, worrying trend?

They may have.

But highest household debt ratio in the region and ~50 people going bankrupt everyday are not data that you want to simply ignore.

I think so too.

But not 30 million ppl.

Not many people can take up loan, not pay and get bankrupted. (Babies, too old, indigenous, etc)

Maybe only max 40%? = 12 million people?

Point is : there are people out there who borrowed beyond their means.
When they can't pay back, a lot of parties are affected.

True, a lot due to credit card and car loans, b'cos these are debts that catch up with you very fast.
Have mentioned this many time in this thread.

Now, are there those who borrowed beyond their means to buy houses? What happen if they can't pay?
This will only show up when most of the DIBS props comes VP in the next two years.

The consequence is logical and clear. Maybe that why nobody here wanted to even talk about it.

OK just me being dumb and repeating something obvious. Sorry. sorry sorry.

This post has been edited by Fazab: Sep 29 2011, 11:44 PM

It is hard to get reliable data to make rational decision, so we can only predict using anecdotal data.

And there seem to be plenty of this now - take up rate of new launches has slow down, lawyers saying not much S&P activity, bank say tightening lending, almost every other housing market is having impending crisis etc etc

The critical point will be how many buyers out there are savvy investors like those we have here, who planned well ahead, versus how many are those who bought for wild speculation, without an exit strategy and only hoping that prices will be up when they get to sell.

If the savvy investors dominates - market will likely see a soft landing

If the crazy speculator type are large in numbers - we will suffer at least a hard landing

now most bankruptcy cases are due to car loan and credit card loans, true, b'cos these type of loans catch up with you very fast - few months no pay - kena.
Housing loan only catch up with you after property is VP, esp if got DIBS; then only we know how many reckless borrowers are out there.

I am not hoping for anybody to suffer.
Just hoping that if market softens, developer will go back to building some smaller, less glamorous but affordable houses for those who really want a house for own stay.
That is what we need most. Not more high-end luxury condos for speculators to make money.

Rates did shoot up to >11% in 1998 very suddenly (yes, almost overnight), but that was because our govt need to fend off a currency attack.

Fortunately, it was quickly re-adjusted down due to 'various reasons' (the rest is history.....)

But the lesson to learn : - that was all it took to spook the market - property price did drop after that b'cos people got fearful.

Only few 'new' launches in 1998 - 2002, and they were all below pre-1997 prices.


So, 2012/2013, will history repeat?

Do we have a trigger coming up? Something that will spook the market badly?

If it does happen, I am worry that it will be much worse,
b'cos unlike 12 years ago, nowadays many people living on credit.

What if a number of 'someone's did not think of taking care? You know, plain reckless, or maybe blinded by greed?

The official figure of 47 bankrupts a day is rather scary
We have people who are not very good at taking care of themselves.
And a lot of them, it would seem.

Yes, these are credit cards and car loans.
We will know the figures for house loans defaulters come 2012 when a lot of props are VP and the payment starts.

Seriously, I myself hope I am wrong and you are right.
But numbers shouldn't be ignored just because they don't fit our theory.

I agree philosophy is fun

But sometimes need to take a quick look at surrounding. You know, reality check etc. etc.

The housing market is a mass market. It doesn't move by the power of a few.
At least not for long term.

The mass move it. So we need to predict what will be the mass's reaction. Not the silent minority.

Anyway, as said, I really hope you are correct, and I was worrying to much. For my kids.

Chill. Off to bed.

During the beginning of the US subprime crisis, the reaction by banks were to raise interest rates.

Because they were losing a lot of money (many people overborrowed and cannot pay) they try to cover by charging those who can pay.
This only stop when the US Feds step in to bail out the bank.

True, the situation was 'saved', but at what cost to the country?

Also, US and UK can do quantitative easing - print more money like mad to save the economy - we cannot.

Can this happen in Malaysia? Fortunately our banks are still quite regulated. No funny derivatives and loan bundling.
But if too many people over-borrowed to speculate, it is possible to have a short term mini subprime crisis.

As I keep emphasizing - the question is how many people have been borrowing recklessly.

That will determine how market will go - up still, soft landing, hard landing, crash.

Manutdiggs kor is right. We can only predict. He is optimistic, I am conservative.

We choose what we want to believe in, and act accordingly. Life goes on.

---

Added on October 18, 2011, 12:01 pmMay be culturally different for the older generation.

But take a look at the younger generation. Their financial outlook just like the Americans, Europeans.

That is what Lee Kuan Yew very worry about.

This post has been edited by Fazab: Oct 18 2011, 12:01 PM

There are always attenuating situations. In economics, everything's a double-edged sword

1. Low interest rate
- but people over-leverage, or bank tighten lending criteria to avoid overexposure

2. Low unemployment rate - but wages also low and does not match inflation etc.

3. Most business doing well (Both SME & PLC) - but wealth distribution not even, income gap widens

4. Growing economy - depends, if growth is domestic driven, may not be creating real value. If due to pump priming, may lead to loss of value.

5. Interest from overseas investors - may only be concentrated in certain classes of props, hotspots.

6. General positive and confident outlook for the future - may shift funds to other investment vehicle with faster return rates. If confidence return to the stock market, a lot of money will flow to there.

All these will influence market movement. Never say never like the US did. They got all 6 going, yet subprime happened.


Those who are waiting to buy are generally for own stay. Usually steady income, well planned for recession and ready to go.

So yes, they can and will pounce even if A-F happen.

If you go back and read Post #2084 Page 105 of this Thread you will find that I have given my opinion on this, and I agree with your analysis.
Full blown subprime won't happen here, or for the matter, any other country, they will be real stupid to repeat such a clear mistake.

I merely want to share with the writer that attenuations to Factor 1, 2 and 6, at least, are already happening.

So there is a possibility of a short term mini subprime, where overleveraged people are forced to offload property they can't hold.
No offense to the younger generation, but I do see a lot of them use 'creative borrowing' to buy props for flipping.

Repeat : market is moved by the MASSES. Not one or two people.

(just like what we say here is unlikely to affect market. how many people read LYN anyway. so no need to get excited)

Repeat : what is VP last/this year was purchased in 2007/2009 - these are the 'first wave' purchasers.
Yes, they have holding power, and we do not expect problem from them.
What is worrying are the 'second wave' purchasers, who jumps in later to flip when they see opportunity 'that must not be missed'.
These are the 'creative borrowers' who may or may not get burn.

repeat : I am hoping there is soft landing, and no one gets burn too badly.

repeat : until someone can provide data that there are no or insignificant number of such reckless borrowers,
perhaps we should not choose to ignore this factor, just because it does not fit our thinking.

We believe what we want. I believe there are many such people that's why I worry.

You can be optimistic. I still respect your stand.

One example : The US subprime crisis.
A lot of people believe that it was cause by a small group of very powerful money-makers. Can certainly be true.
But subprime would not have happen if the MASSES did not provide the market and willingly fall for it.

(OK repeat : Subpime won't happen here. Just example)

Repeat : No worries about yours and mine parents' generation. They are careful savers and savvy investors. If you say they have cash I belip.
The you and mine and younger generations of flippers out for quick money is what to watch out for.

OK. I think I have said my piece for healthy debate here. Better move off before overstay welcome.
Am beginning to sound too much like Lee KY oredi.

Cheers guys n gals.