I think FED will keeping low interest rate for a long time. US dollar will continue to be weak. Foreign capital will be coming to Asia, especially China for better investment return.

I think current government is doing a good job to attract FDI. If MY continue to receive spillover of foreign capital, we will be doing good.

How property price is going to drop now? We won't see BLR around 10% to pressure property price. The economy is recovering...

No thanks, Thai too on the rock, so investors 'spill over'.

That's cycle of life, either buyers win or sellers win. Sometimes, win sometimes lose but life goes on.

One party lose, other party will be benefitted from the lossers. Unless buyers refuse to sell, buyers refuse to buy? How can unless both are dead?

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Added on May 17, 2010, 10:19 amBelieve many having too much cash, like some forumers said, local not many choices, either stocks or properties. Many in view tat stocks too high and with volitility of global market, properties 'safest' option.

I ever see construction boom during 1998/1999 crisis in my hometown. Everyone built built built while market all red So time to enter stock

This post has been edited by Bobby C: May 17 2010, 10:19 AM

Read from the yesterday "Sin Chew Jit Poh", new build houses in Kelantan increase by 30%.....how true is it ? Any Sifu familiar with the situation?

Hi Pai,

I am new in RM. Some say fixed loan rate is better at this point of time while some say loan base on BLR is better,(current fixed rate is about 1% higher that discounted BLR rate). What would you say?

I prefer fixed rate...less headache...huhu

Hi Phang,

My personal view is unless the fixed rate is below 5% p/a, think we'd be better off long term taking a floating rate instead. Plus this fixed rate normally offered by insurance company comes with plenty "hidden" costs.......

Generally if you are looking at long term charts, the VRM (Variable Rate Mortgage) or as refered to here as the BLR - xx will always be the better savings in the long run. Further to this, the VRM in the Western World has been responsible for making property so affordable that it had most first time home buyers get in over their heads along with ZERO down deposits in which caused the RE bubble now deflated. Fixed 30 year's at 5% cannot even bring these buyers back. In the USA you can just walk away!

I found this which is a few years old.

Below info shows the Malaysia Base Lending Rate (BLR) for January of each year from year 1989 to year 2009.

BLR

2009 - 6.50
2008 - 6.75
2007 - 6.75
2006 - 6.00
2005 - 6.00
2004 - 6.00
2003 - 6.50
2002 - 6.50
2001 - 6.75
2000 - 6.75
1999 - 8.00
1998 - 10.50 - 12.27%
1997 - 9.25
1996 - 8.50
1995 - 6.60
1994 - 8.25
1993 - 9.50
1992 - 9.00
1991 - 7.50
1990 - 7.00
1989 - 7.00

From the record, it shows that the highest BLR Malaysia ever has is 12.27% in year 1998 and the lowest BLR is 6%. The average is 8.1%. Probably you can use this to justify whether it is better to take the fixed rate loan or the BLR - x% housing loan.
At this moment 2008, the BLR is 6.5%, next year 2009 should have a lower BLR but whether it will dive into a new lowest BLR rate that Malaysia ever has. We will wait and see.

With 2010 came 5.55 now 5.85% so unless we have a significant change in rates do to inflation, then variable is the way to go. I still believe rates will stay low for a period of time 12-18 months and with Larry Summers hinting that a new stimulous program may be in the works for the US, you may see rates come back down in Malaysia.

On the flipside, if you find things getting quite inflationary, you may opt for a fixed mortgage when the time comes.

There are hidden costs in the fixed rate as well!

Actually using BLR will not give you an accurate assesment on MY's historical mortgage financing cost. One should look at actual cost of financing (COF) for mortgages instead. An example, BLR was its lowest in 2004-2006, but our current COF is cheaper now despite the fact BLR is higher now VS 2004........

In the long term, property prices will definitely go up. In the short term, it depends on where you are buying.

In any case, some purchasers are buying now as they can get very good rates, up to BLR - 2.4% last year. And it's flexi loan. These purchasers reckon that they can use this loan for their business in the future as it is much lower than getting a commercial loan.

the question of whether property price will drop or rise is a concern for flipper, for people who stick to the fundamental of property investment, which require a lot of patience would not worry about it. but hey, this is google age, we want everything fast

u sure u want fixed rate?
i still have a 5.5%lock in..

erm...I just got 4.85% from ING...then when I read this forum..seem to be...flexi loan is much better...too late for me already...

but I still believe that 4.85% fixed rate (25 years) can be useful to me...any advice from u guy for me fully utilise my fixed rate house loan?

or am I in a wrong thread...huhu

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Added on June 7, 2010, 6:11 pmThanks for the infor.

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Added on June 7, 2010, 6:13 pmGot it! Thanks

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Added on June 7, 2010, 6:15 pm
This post has been edited by phang88: Jun 7 2010, 06:15 PM

On average, housing price is increase by 5% to 7% per annun. This is due to cost pull inflation, not due to demand pull. Unless there is a stock crashed, then you hava an opportunity to buy at the lower price.

did you stretch to maximum loan?

any sifu out there can advice on whether or not is better to stretch to maximum loan? My maximum loan is 35 - 40 years depends on which bank.

General saying, if it's for own occupied, pay off as soon as you can afford. But if it's for investment purpose, you should stretch it as much as comfortable, also provided you dun have better use of money (for other investment).

One good combination is stretch to maximum, but taking up flexi loan where you can still pay regular sum/single top up to reduce the outstanding principal effectively, while maintaining the flexibility for you to draw down the extra pre-payment as and when you need it.

god damn the property prices should be coming down now, there is no reason that the price can remain so high for so long. What properties are all the new executives coming out going to buy? RM3k salary is already considered quite high for some people. RM3k barely able to qualify for a loan for a 250k+ property, lifetime loan, with interest rates eating into almost 50% of total salary.


Banana's, and there are apartments going for 500k?? WTF are the new salaried workers going to buy? At this rate people will never be able to afford a home, unless its some far out place.

Hey didnt you read the memo...It's Different In Malaysia!

In the Western world 3.5x income is affordable and that would mean RM12k/m for 500K, RM6K for 250K.

If what you say is true, it would take 14x income to purchase a RM500K property!

In the top 10 least affordable cities to live, banks were happy still supplying loans at 9-10x income. These cities either fall in Canada or Australia which are facing massive bubbles ready to pop.

Mate, very interesting post. Care to elaborate as I dont really understand the term 3.5x income, 14x income, and 9-10x income?

Cheers.

Klang valley property price is dirt cheap compare to tier 1 cities in China today. Those so-so location, 1000sqft apartment is average about 2 mil RMB (Shanghai average 3.5 mil, Shenzhen 3 mil and beijing 2.8 mil) considering fresh graduate in China only get pay 3k RMB. Most China graduates can only afford to buy in kampong only even that will cost them 600k RMB.

This post has been edited by KLsooner: Jul 1 2010, 10:06 PM