Property price and interest rate. What happens when rates rise in H2 2022?

Property price and interest rate. What happens when rates rise in H2 2022?

Interest rates have been rising throughout the world. Here in Malaysia, Bank Negara Malaysia is doing it’s best to keep the rates unchanged to that it’s accommodative to economic growth. However, this may not be maintained for too long. Expectations are that the interest rate will rise in H2 2022 as well. Here’s that article earlier: Interest rates will rise in H2 2022. Let’s be ready and be happy too.

Impact on monthly instalment for RM500k property

If rates rises by 25 basis points; 0.25%, then the impact on the monthly payment is an extra RM61 per month. It’s a 3.2 percent increase. If rates were to rise by 50 basis points; 0.5%, then the impact on monthly payment is an extra RM123 per month. This is an increase of 6.5%. Yes, considered quite significant. All these numbers will affect any potential loan applications where the applicant’s salary is on the borderline.

Impact on monthly instalment for RM1,000,000 property

If rates rises by 25 basis points; 0.25%, then the impact on the monthly payment is an extra RM122 per month. It’s a 3.2 percent increase. If rates were to rise by 50 basis points; 0.5%, then the impact on monthly payment is an extra RM247 per month. This is an increase of 6.5%. Yes, considered quite significant yeah. All these numbers will affect any potential loan applications where the applicant’s salary is on the borderline.

We should not worry too much on interest rate increase

We can see that if it’s a RM500,000 property, the actual difference even if the rates are increased by 50 basis points is just an extra RM123 per month yeah. If we have to be worried because of RM123 per month, it may mean that we are over-stretched. If this happens, it meant that we are not managing our finances well. It’s not because of property investment yeah. It’s because we are overstretched financially due to some other commitments.

Happy understanding.

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