The strengthening of the ringgit against the US dollar, fueled by positive macroeconomic developments and Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 3.00 per cent, is expected to stimulate the property market, offering an ideal opportunity for property purchases.
Kashif Ansari, co-founder and group chief executive officer Juwai IQI, highlighted that BNM’s decision to keep the OPR unchanged, along with the potential for a rate cut at the upcoming Federal Open Market Committee (FOMC) meeting, is beneficial for property values and transaction volumes.
He told Business Times that stable interest rates help ensure consistent borrowing costs for both mortgages and development financing.
“This means that existing loans with floating interest rates won’t see significant changes, keeping monthly repayments steady. That’s good for household finances and for the industry. The expectation that rates might be cut at the next meeting also gives homeowners and buyers hope that their monthly expenses might actually fall in the future,” he said.
On September 6, BNM held the OPR at 3.00 per cent, and analysts expect it to remain unchanged through the end of 2024 and into 2025.
Kashif said in the medium term, lower interest rates typically drive property prices up, as buyers paying less on their mortgages are able to spend more on their homes.
“We expect demand to continue to grow at sustainable levels. The stable interest rate environment is positive for property without causing irrational exuberance in the market,” said Kashif.
Sr. Samuel Tan, a property analyst, echoed this sentiment, saying that when the OPR was reduced to a historic low of 1.75 per cent from 3.00 per cent in 2020 due to the COVID-19 pandemic, it became more affordable for new property buyers to secure home loans with lower initial interest rates.
Source: NST online
