Borrowers brace for even tighter financial situations

PETALING JAYA: With many still grappling with the effects of the Covid-19 pandemic, they now face the prospects of being saddled with the increase in the Overnight Policy Rate (OPR).

Many are already cutting back on their expenses to brace themselves for even tighter financial situations.

Financial controller Karthik Govindarajoo said Bank Negara should consider revising the rate in the third quarter of this year to give the public and businesses that are still recovering some “room to breathe”.

He hoped that the government could provide subsidies to help borrowers cushion the impact, especially when a second readjustment is expected in the second quarter of the year.

“Some of us had our salary cut before this due to the pandemic, and now all of a sudden, they decide to increase the OPR, which will affect our mortgage instalments.

“With the current difficulties in managing household expenses, this is going to be a burden to many,” said Karthik, who has three housing loans under his name.

While she understands the readjustment is needed due to inflationary pressures, Syalikha Sazili, 33, says she is bound to feel the pinch.

“Petrol prices increased yesterday (on Wednesday), and today, we read about the OPR adjustment.

“We understand the government has no choice, so I guess there is nothing else we can do but to spend prudently and focus on buying only necessities,” she said.

Another borrower, who wished to be known as Amy, 44, said Bank Negara should have waited until at least next year before readjusting the OPR.

However, the senior executive said she will try to manage her spending and avoid refinancing her loans.

“We were glad that we could withdraw our Employees Provident Fund (EPF), but prices of goods are increasing as well, so I think they should allow us to breathe a little bit before adjusting the rate. I will try to hold on for a while as my husband will be allowed to withdraw his EPF in two years.

“We plan to settle most of our loans then, but for now, we will try to survive with what we have,” she said.

Sharing the same sentiment was Teo Kim Lai, 41, who had hoped that the adjustment would only take place in two years’ time.“We are currently in the financial recovery stage, people suffered throughout the long pandemic and many companies did not give any increments, and some even dished out a pay cut,” he said.

A 26-year-old writer, who wanted to be known only as Lee, said he will have to put on hold his desire for a new car.

“I have been saving for a year, now I think I will wait and see how it goes, while at the same time, I will also save more to make sure I have (a buffer of) at least three months’ worth of instalments in case I lose my job or anything,” he said.

Sandra Khoo, 25, who just bought her first house during the height of the pandemic, said she will have to rethink her finances and keep her spending to a minimum.

“I do have money set aside for repayments, but this increase in OPR means that the money that I have prepared might drain even faster, so I have to rethink my cash flow.

“Ultimately, I will be keeping my spending as low as possible for now and, hopefully, we can all ride this out,” she said.

On Wednesday, Bank Negara’s Monetary Policy Committee increased the OPR by 25 basis points to 2%, from a record low of 1.75%, as global inflationary pressures increased sharply.

Economists have predicted a further hike of another 25 basis points in the second half of this year, though it is subject to the stability of economic growth, pace of inflationary rate, and improvements in macroeconomic conditions.

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