Interest Rate (BLR) Going Up

12th July 2008
Hey guys, this time around, i would like to comment on the speculation on the rising of the interest rate when Bank Negara meets. The day to look forward to is July 25, 2008. This is the date where everyone will be keenly watched. This is the day that your heart should stop for a mere 5 second before it starts to pump blood again. This is the day you need to stop everything and think about the things you own especially your House(s) which was bought using lended money from bank(s) or perhaps ah long.

Speculator actually expect the interest rate (BLR - Base Lending Rate) to go up as early as July 25 and they expected a 50 basis points increase or 0.5% to be done in 2 installments between then and end of this year. For your information, current BLR stands at 6.75% but imagine, it was once stood at more the 12% about 10 years back. It has gone down after the ASIAN crisis but now, we are at its door step again and this time, it does not look good.

This can be seen by the country's inflation that hits more the 5% since last month and will continue to go up and should be hitting 7% by end of this month. You guys have to know that before this economic down turn, the inflation touches only around 3% and this seems as not a good time to do anything at all especially something involving money but then again, what does not involve money nowadays....rite. Base on bankers and developers prediction, this second half of the year would be a difficult one if not stresfull but it seems that all these difficulties will be pass towards consumers, ......well......we seldom hear bank loses money rite in term of consumers services.
Anyway, you should be feeling all these till up to a year but looking at a positive site, we hope that it will only last for this coming 6 months as 1 year is one long year to bear all this.

So, what to expect for house owner or potential house buyers during this time of hardship, well, you would definately need to rethink whatever you are doing now, you would need to think every aspect of your financial commitments as well as your daily responsibilities. This is very critital for those who are considering whether to buy house or not, make sure the house that you are considering located at the prime area, in the middle or long term, it could protect your capital, preserves and grows your wealth, that is able to increase faster then the inflation rates. While that maybe true, there are some issues that need to consider in the light of the current economy situation also.

If you are thinking about property investment, reculculate your financial situation. There have been drastic changes in the market place and the situation, at this point, is still opaque but high prices are here to stay. Make sure you are stressing on affordability instead of good looking house that cost as much as it looks. If you were to ask me, i would basically want to buy any house that seems nice and cosy as well as located in a place that is near to everything and who doesn't rite.... if i were a millionaire, this is all 'sap-sap-water la' but ,unfortunately, i only have million-hair......so crab..... down in the drain goes my dream.

As you guys may know, a few weeks back, the increase of raw materials has spark and outbreak in increasing of prices in many sectors mainly to the construction field as well as the designer's field. Actually the truth is, all this can be felt way before that, as early as end of last year but only now the heat can be felt tremendously but then again, it was predicted.
So, for those who want to buy a place to call your own, do consider this, before comitting to bank loans and all, pls do your research, like asking your bank loan officers, relatives and also bankers who might have experience in buying property. The need for single and a married couple are different. Those with children must consider school factors, so on and so forth. Remember, property is a long term investment and therefore, you must be choosy enough before buying....coz its your right to do so.

Anything that us able to hold its value is considered a hedge. To understand what this means, you need to understand how it works. Property is some what a good example that can be considered a good hedge against inflation. Properties in good location will stand the test of time and in the hovoc time like this, the price do not go down drastically if these properties are well located. When a property is built, it tends to cost more then the previous one. So, basically the prices of old property will be tagged along as well. But there are factors like location, supply and demand that need to be think of. Therefore, keeping your money in the bank will erode the value and why not invest in something that surely go up?....... but then again, do consider all those factors before putting your hard-earn money in property that you do not have a clue about. As for the type of properties, for those who can afford, the hight-ends one in a good location are always a better hedge. The risk factor is much lower as high-ends property do not fluctuate much. Secondly, the hight-ends always moves first.
For this, make sure you know the reason of you buying a property as buying one to call a home and buying one for investment has different factors to think about.

Bottom line is, before buying a house or perhaps you might be already owning one, you must always put your financial situation as first priority and with the economy uncertainty, plus the increasing of BLRs, managing our money will be hard. If you could not afford a property, then save in the bank for now. Don't push it, and if wrongly plan, all your money will be in my pockets to share......kekekeke.

PS: Source: Bizweek, Land and Property