Same mortgage rates into 2016

Would you be happy if your mortgage payment(s) remain the same throughout 2015? I think I would be happy. For those on the borderline who kept shouting that they needed help, they should also be happy. In fact, I think the ones who are neutral would be those who are debt free and out all their savings into FD waiting for slightly higher returns. If you are one of them, please rethink and reconsider your 100% FD policy. No further comments though. According to one latest news, Standard & Poor’s (S&P) Ratings Services said that they believe Bank Negara Malaysia (BNM) will maintain the overnight policy rate of 3.25% into 2016. In other words, no changes are expected for the whole of 2015.
It’s not actually an easy decision, especially with the depreciating Ringgit. An adjustment would be able to help stem the outflow and thus continuous depreciation of Ringgit. How much is really a huge question. Perhaps even with interest rates up, Ringgit’s depreciation may still continue and this will be counter-productive because businesses would find it ever harder to service their debts and the debt level for everyone would increase. If the rate of household debts increase versus the slowing GDP, think what would happen to the Ringgit? Yes, further depreciation. Thus the current low rate is expected to be accommodative to the pro-growth stance of BNM thus far. Inflation is no longer a worry even with GST due to the much lower oil price today.
Personally, I would prefer an even lower rate next year if possible. Pro-growth stance should continue, the uncertainty and negative sentiment due to GST should have been negligible by mid of 2015 and with a lower rate, more businesses may be tempted to grow their businesses further. Yes, I am no economist but I think economic growth is not just about fiscal policies but also the management of sentiments. Is demand for property lower today than two years ago? Has the fundamental of the country suddenly changed totally within the past 6 months when Ringgit started depreciating? Are there more people out of job today or are there more jobs chasing talents today? The answer is no to all three. In other words, everything should do fine, yet, majority of the comments online are mostly negative. Why? Sentiment of uncertainty, staying on the sidelines due to GST and negative reports typically sell better too. It’s funny right? Think clearly. Act objectively. May we enjoy a 2015 of prosperity.
written on 8 Feb 2015
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