During the Budget 2014 announcement sugar subsidy will be
reduced by 34 cents p/kilo. Then we have increment in electric
tariff and insurance premium this year. What about GST
implementation in April 2015 ?
Existing Loan Borrowers
When there is an increase in BLR, most borrowers will be worried that their
monthly installment will increase. I had a call from one of my loan borrowers
many years back when BLR adjusted upwards, and these are her exact
words. “Miichael, Miichael, the bank made a mistake, BLR increase but I am
still paying the same loan installment. I am not going to tell the bank. Ha Ha
Ha”.
What actually happened here?
The first thing that will happen when BLR increases is the banks’ computer
system will automatically adjust and lengthen the loan tenure. That is why
my loan borrower still pays the same monthly installment. That is why many
borrowers complain why after 5 or 10 years of repayment the loan principal
amount did not reduce much.
If you have the extra money to pay for the additional installment you can
always go to your bank, sign a form to increase installment and maintain
loan tenure.
New property purchasers and investors
I have received many messages recently asking me whether to borrow
now or wait as BLR is expected to increase. They are worried that monthly
installment will rise.
Now let’s look back to the year 2009 when BLR was at the lowest 5.55%.
At that time the interest spread was around minus 1.3%. You will get a net
interest of 4.25%. Today our current BLR stays at 6.6% but look at the spread
in which the banks are offering at an average of minus 2.3% in w