KUALA LUMPUR: Bursa Malaysia plummeted again on Wednesday, with over 900 stocks in the red, as escalating tariff wars between the U.S. and China—two of the world's biggest economies—fueled concerns, stoked recession fears, and wiped out massive amounts in market value. At closing, the FBM KLCI fell for the sixth day, plunging 42.97 points, or 2.98%, to 1,400.59, its lowest in 21 months since July 2023. The market traded within a range of 52.36 points between an intra-day high of 1,438.99 and a low of 1,386.63 during the session. All indices ended the day in negative territory. The benchmark index has lost a whopping 125.93 points, or 8.3%, since the announcement of sweeping tariffs by US President Donald Trump on April 2. In the broader market, selling overwhelmed as 919 stocks plunged, while just 224 managed to rise, pushing market breadth down to a dismal 0.24. About 3.77 billion shares, valued at RM3.8bil, changed hands. Dealers expect market sentiment to remain cauti...
Upto what extent you can drown into debt in a month, and come out smoothly by repaying, is best shown by your debt to income ratio. This ratio of debt and income is the key method to determine the availability of cash from you monthly income for repayment of your loans….or, in other words, it expresses your true borrowing capability. That’s why creditors consider debt to income ratio a very effective tool to figure out your monthly payment, and your true financial situation. This ratio clearly calculates the total amount of loan an individual can take.
There are 3 categories of debt to income ratio:
Front End and Back End Ratio
Your creditors tend to analyse your debt to income ratio with two numbers 33/38. 38 is the back end ratio. It is the long term debt ratio. And front end ratio is 33, which is the ratio of housing expenses.
Housing Expense Ratio
The payments of an individual’s housing normally means each and every payment you need to make in your day to day life. That includes all of your monthly payment. It includes costs like- principal, interest, taxes, and insurance. The ratio of housing expense is meant for measurement of an indivudual,s income’s percentage which would cover all his housing payments. A limit would be normally set by your creditors on where your debt to income ratio is wanted by them.
For example, sometimes the creditors set a rule that they want your housing expenses should not exceed 28% of your gross monthly income, and like that.
Long Term Debt Ratio
Long Term Debt ratio is used to calculate the specific percentage of an individual’s monthly earning that is available for making repayment of total debt. The calculation of Long Term Debt ratio includes your housing expenses (PITI), auto loans, credit card loans and some other debts.
Here also, the limit seting trend exists like that of your Housing Expense Ratio. The creditors sets a limit to your long term debt ratio. It is also referred as Back End ratio.
There are 3 categories of debt to income ratio:
Front End and Back End Ratio
Your creditors tend to analyse your debt to income ratio with two numbers 33/38. 38 is the back end ratio. It is the long term debt ratio. And front end ratio is 33, which is the ratio of housing expenses.
Housing Expense Ratio
The payments of an individual’s housing normally means each and every payment you need to make in your day to day life. That includes all of your monthly payment. It includes costs like- principal, interest, taxes, and insurance. The ratio of housing expense is meant for measurement of an indivudual,s income’s percentage which would cover all his housing payments. A limit would be normally set by your creditors on where your debt to income ratio is wanted by them.
For example, sometimes the creditors set a rule that they want your housing expenses should not exceed 28% of your gross monthly income, and like that.
Long Term Debt Ratio
Long Term Debt ratio is used to calculate the specific percentage of an individual’s monthly earning that is available for making repayment of total debt. The calculation of Long Term Debt ratio includes your housing expenses (PITI), auto loans, credit card loans and some other debts.
Here also, the limit seting trend exists like that of your Housing Expense Ratio. The creditors sets a limit to your long term debt ratio. It is also referred as Back End ratio.
Lenders take the debt to income ratio of the borrowers to determine their eligibility to obtain the home mortgage loan. Responsibility also lies upon the borrowers to take out a home mortgage loan which is affordable to them.
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