PETALING JAYA: Bank Negara Malaysia’s move to hike the overnight policy rate (OPR) by 25 basis points (bps) yesterday will saddle Malaysians with higher debts, exacerbating the cost-of-living crisis, says a property player.
Elvin Fernandez, managing director of property valuation firm Khong & Jaafar, said the OPR hike will result in people feeling the pinch of having to fork out more money to service their property loans.
“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.
According to Fernandez, the OPR hike will also adversely affect the saleability of houses, which will cause the property overhang situation to get worse.
He said this is because the higher interest rates will deter new buyers from making a purchase as it will cost more to repay their loans.
In an unexpected move, BNM resumed its monetary tightening policy after raising the OPR to 3% yesterday. Since May last year, the central bank has increased the OPR five times, totalling 125bps or 1.25%.
Fernandez said the higher charges may not be a problem for those with a strong source of income, but the same cannot be said for those impacted by the rising cost of living.
“For those who can easily ride out the increasing cost of living and increasing mortgage, it may be okay, but what about the others? Can they hang on?” he said.
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.
She said this would, in turn, cause applications for housing loans to drop as it will deter “conservative” home buyers from investing.
“These conservative home buyers may consider saving more (money) instead of investing in a property,” she added. - FMT
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