+1

Interest up a little bit more is fine for me, less competition when comes to launching.

I blow water only

There are thousands of ways for the government to claw back e lost tax. Aren't they doing it rite now? To them its like its like "Like it or not, I'm here to stay for another 5 years". So say and protest all you want... All they care is how to 'fatten" their own wallets from now.

Jokes aside, with the current market and economy condition. I doubt that there will be any booms anymore on the property market. I feel that property prices will just become stagnant as transactions are lesser by day. Properties in established areas won't be affected much as it is well sought after and owners have most probably got it off at a very low price before. Those harping on getting some "dead chicken" are like those who are preying on property owners who couldn't service their loans anymore and have to dispose off their properties to minimize their losses. But imho for that to happen, it would require the economy to crash like 1996-1997 and that would be very damaging to our countries' economy as well as our Ringgit which in turn affects all of us as we are holding on the Ringgit. Also remember that even though there may be desperate owners willing to let go of their properties then, it would be hard to get a loan then as Banks would have tighten their hire purchase requirements and not to mention the crazily high interests like back then in 1997.

This post has been edited by TOMEI-R: Dec 22 2013, 10:54 PM

Malaysia economy no longer like prior before 97.
Situation is totally different.

Prior before, you have low base, aka from agriculture to industrialisation, a lot of sector booming, good profit margin, corporate can withstand high funding rate (BLR) to sustain and grow the business.

Now Malaysia economy is on middle of the road, aka in the middle income range.
A lot of SME is on razor thin profit margin, no thanks to globalisation.
Higher interest rate can easily kill off them.

Gov expenditure no longer can go more due to persistent budget deficit over the last decade.
In fact, even with many subsidy cut recently, gov budget is still a deficit situation.

You need strong SME sector to propel the economy in a more healthy way. Cannot always rely on gov, unless the gov is cash rich, then different story.

Since after 97, certain capital control is still there, not as free as last time. Some capital control is indeed needed to have a more stablise environment.

As said before, Fed has repeatedly saying Fed fund rate is going to be low for extended time period.
So Fed may also repeat what Japan has been doing for the last 2 decades, low interest rate throughout.
Unless US economy become red hot.

So whether there is link between cost of fund of bank in Malaysia and Fed fund rate, it doesn't matter. Rate is going to stay low for some considerable time.

No link, there is no reason for BNM to raise rate unless economy growing strongly, which is unlikely with squeeze of disposal income for middle income people.

Link, Fed fund rate is highly to stay low for extended period of time.

Even there is need a move on upside, it won't be drastic as 3%, a 0.5 to 1% is considered a quite big and bald move as well.

You cannot have 8 to 10% interest rate while most countries on the world is on 0% interest rate.
Unless the economy situation of the country is not strong or healthy enough, whereby you need high rate to fence off inflation and capital outflow.
If not, you may attract too much liquidity (if there is no capital control), that fuel the bubbles in the economy.

Nowadays, it is a globalisation world, money can flow in and out with just a press of button.
We cannot use old day method or situation to assess fast moving financial world nowadays.

We need to accept that, a grow of 7~8% is a past, this figure is for low base and starting time. Once grow and develop up to certain scale, the pace will drop. To grow per capital income from RM1000 to RM10000, can be fast and easy, but to per capital income from Rm10,000 to Rm100,000 is more difficult and at slower pace.

Few investors are willing to cut losses but prefer to keep on paper until positive. However, when lending rate increased by 3%, many flippers will be in foreclosure and which almost certain will lead to available of dead chicken. Bank interest rate rise of 3% is not an economy distress, hence need not recession or economic crisis to have dead chicken.


As you pointed out correctly that money can be moved with a press of button.

Japanese economic model has proved low interest rate alone may lead to deflation and poor economic growth. Hence, the Fed is flooding the market with liquidity to avoid deflation and create a healthy inflation. Inflation in the U.S is certain will return, and interest rate is peg to inflation rate.

When US increase bank interest rate, local banks will follow else money will flow out. Fed or BNM won't increase interest rate by 3% in one sitting but over a period of one to 2 years unless inflation rate is out of control.

This post has been edited by icemanfx: Dec 23 2013, 12:41 AM

Fed has been saying rate will stay low for extended period, so I do not think a 3% of incremental even over the 3-4 years period can be seen.

Fed want to see some inflation at around 2%.

With 10 years treasuries approaching 3% after tapering news, the rate is about on par with Malaysia OPR.
In fact previously due to QE, there is massive flow of money to Asian region, which one of reason property price sky-rocketing, asset price inflated across.

Japan low interest rate is not the culprit of deflation, unrelated.
The deflation suffered by Japan is due to multiple factors.
Previous 80's giant real estate bubble become too big and burst, lack of large scale of revamp of banking sector, aging population etc.
The deflation has nothing to do with low interest rate.

As said before, unless the economy is red hot and growing robustly, there is remote chance for rate to increase as much as 3%.

double post

This post has been edited by icemanfx: Dec 23 2013, 01:54 AM

If inflation rate is around 2%, what is the expected interest rate?

This post has been edited by icemanfx: Dec 23 2013, 01:55 AM

As much as I want dead chicken everywhere on the road, but you need to get the calculation accurate first to arrive at your conclusion. Based on your straight line calculation, the effect on extra interest expense is big. But in fact the home loan calculation is based on reducing balance. The effect is only 50% of straight line calculation. So, your assertion that a 3% interest rise will cause foreclosure will not stand. We may need interest rate rise of 6% to match your expectation. Again, I urge you to calculate first before you arrive at your conclusion

This post has been edited by Showtime747: Dec 23 2013, 08:01 AM

Guys, lets face it. We all know the BLR will go up next year but im quite sure we'll only be seeing a max 50 basis points increase which would put the BLR rate at 7.1%. But with the newly proposed BNM benchmark to replace the BLR system, i would think that a max uniform rate of about 4.6-4.7% would apply. This increase is not meant to slow down the property market but to weed out speculators and those who go into property investments with the herd mentality. The real investors would not be affected. With this move, i expect property prices to stabilise and become more realistic. Removal of the DIBS and other measures are meant to curb property developers from having a free reign in raising prices and raking in huge profits at the expense on unwary buyers.

So now i dont expect a property market crash. Probably a slump or stagnation of prices which is quite alright.

Flipper hope - Property market get second round up trend.
Invester hope - Property market at worse stagnatation.
Buyer hope - Property market crash while their pocket don't.
Investor advisor hope - Keep on talking interest will not go up nonsense..

Every one have their own agenda.

My view,
0.25% to 1% depended how GDP and unemployment rate.

One may say it is a negative interest rate, but currently Fed and central banks around the world is pro-growth instead hawkish on inflation.
They generally more about deflation than inflation, as long as inflation is not running out of control.

I would agree on this, the most rate may be hiked at current economy situation, highly won't more than 0.5%,
especially with GST in the pipeline.

A reason for Japanese economy to be in stagnant for over 20 years is negative interest rate and Fed will repeat the same mistake?

+1

Where did I mentioned monthly repayment or straight line calculation?

RM1m x 1% = RM10k is straight line method. Plain and simple Just go and use a scientific calculator, or go find some website with home loan calculator to verify. Then you will understand better what is reducing balance method

If you can't find the reducing balance results, let me know. I will post it here for you

Haha u got the bull's eye.

If after 3-4 years sell at extra RM60k sure lose one big chunk. Calculate all the stamping fees,legal fees,whatever fees and interests incurred thus far. Perhaps owing the bank more than principal summore since only been paying installments for a short while only. This time they die lor. Padan muka,who ask to be soooo greedy ler...

I won't commit whenever their answers are not sure,cannot confirm etc bcs sales people are taught to "lie". If the say projected rental is RM3k I will only give it RM1.5k. They will jack up by 50-70% in order to excite buyers with the BBB syndrome.

This post has been edited by TheOwl: Dec 23 2013, 11:40 AM

As said before, the negative interest rate is not the reason why Japan in deflation.

Low interest rate /= deflation.

Negative real interest rate only hurt saver.
US is not known for high saving rate.

US population condition and culture of spending is not the same as Japan.
In fact, US economy already show pretty good number across.
Latest Q GDP is 4.1%, which is a very good number.
Stock market all time high.
USD show strength.
US corporate earning is improving.