That is
Interest Rates and
Earnings.
When interest rates fall, the market spikes up in the short term. But in the long term, the market follows the direction of the interest rate and goes down. When interest rates rise, the market will fall but in the long term, the market takes the direction of the rate and goes up.
After the US declared they are going to raise the interest rates gradually, I had been receiving from my bank that my home loan interest rate is increased from initially 1.06% to 1.07% to 1.099%. Today I received another notice from my bank regarding my new revised home loan interest rate. It is now 1.104% per annum. I had been receiving notices from my bank every 3 months regarding the new interest rate. Seem that it is inevitable for the rising interest rates but one thing for sure it will be getting higher and higher in the next 2-3 years. As long as it is still below the HDB home loan rate of 2.6%, it is still considered "cheap" to get a home loan from the bank.
Property owners who made their purchases of private home and are stretching to their personal limit, will be at risk for them on the rising of interest rates if they calculated their repayment loan to be "just enough" for the purchase. Either they rent out their property to make some rental yield to cover the bank loan or try to refinance at a later stage to bring down the loan amount.
