The interest rate has increased by 0.75% in the US while the interest rate in Malaysia is not moving.
This is the forecasted interest rate hike by Fed. By February next year, the interest rate will reach its peak and hover around 3.75% – 4.5%.
Considering Malaysia’s interest rate is always 1.75% higher than the US rate, our current housing mortgage rate could rise from 3% to 6.25%.
At a 3% mortgage interest rate, your monthly repayment is RM 1924 if your loan amount is RM 500k.
At a 6.25% mortgage interest rate, your monthly repayment is RM 2,935.
Are you capable of forking out this extra RM 1,000?
If Bank Negara Malaysia does not increase the interest rate just to keep the monthly mortgages low, Ringgit Malaysia will depreciate. Can you afford to maintain your current lifestyle if inflation is higher?
In order to reduce this risk, I am hoarding cash and converting a sizeable portion of my cash into USD.
Just my two cents opinion.
Source : Donkey Stock