Maintaining OPR at 1.75 per cent good for the housing market

Bank Negara Malaysia announced that the overnight policy rate (OPR) will be maintained at 1.75 per cent and this should augur well for the housing market, says iProperty.com.my general manager Shylendra Nathan.

Nathan said it will continue to provide short-term relief for property owners with existing home loans and lower home loan interest rates for property seekers looking at home financing.

He said while the recent reimposition of the Movement Control Order (MCO) in select areas in the country will affect economic activity in the short term, the impact will be less severe as almost all economic sectors, including the property sector is allowed to operate.

Nathan further said that BNM’s announcement is timely as every ringgit will matter for Malaysians in household spending and securing essential needs.

“The few hundred ringgit saved on home loan monthly installments will mean more cash on hand to spend on essential needs such as food, medicine, and child care,” he said.

For landlords, low OPR will assist them to save money especially when movements are restricted which resulted in the difficulty of finding tenants.

“Furthermore, the lower financing cost advantage will help to offset the drop in rental income. That being said, tenants are still in a better position to negotiate rental prices and this has been reflected in slight drops in rental yields,” he said in a statement.

Nathan said interest in the property is encouraging despite the Covid-19 pandemic with more property seekers shifting to digital platforms.

He said the current low OPR environment will also continue to supplement the ongoing vaccination program and the recent voluntary AstraZeneca vaccination program as the country works toward sustained economic recovery.

As at May 4, 2021, over 900,000 people in the country had received at least one vaccine dose, according to Health Ministry data.

Nathan said in the foreseeable future, the ongoing vaccination program is again crucial to the recovery of the local property market.

The government has secured enough vaccine doses to enable the country to achieve some form of herd immunity by the end of 2021, despite supply challenges and signs of vaccine hesitancy in the short term.

“Hopefully we get to see the drop in infection rate which will translate to higher consumer confidence and bolster the property market’s recovery in the second half of 2021,” Nathan said.

Source: NST