It's the 4th day of 2015, but you might not be aware of the change of our Malaysia's main reference rate. It has been changed from Base Lending Rate (BLR) to Base Rate (BR) effective 2nd January 2015.
For better illustration, check out the official release from Bank Negara Malaysia (BNM):
Base Rate Malaysia Starting 2015
How does it affects me?
Definitely my first question. Basically there's two part for the answer:
Loan BEFORE 2-Jan-2015:
Existing loans that currently pegged to BLR/BFR will continue as it is, until full loan/financing settlement or up to renewal, respectively. So you might want to consider refinancing by using the new Base Rate if it is lower.
Loan AFTER 2-Jan-2015:
Well, you will be using Base Rate! But good thing for you, now you can compare and choose the best effective lending rate for your new loan as different financial institutions will have different base rate.
Check out the latest effective lending rate for a standard 30-year housing loan of RM350,000:
**source from BNM, for the full table, you may download here (Click Here)**
What should I look out for?
Technically, the new framework will be providing transparency to the financial institutions' efficiency and performance compared to the old BLR framework. As you see, different financial institutions have different Base Rate and Spread. Which means, the market will be more competitive than ever, giving consumers like you and me a more attractive rate!
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| Calculation of Effective Lending Rate |
However, do take note that financial institution are given the flexibility to determine their respective benchmark rates, which means, there might be increase or decrease in repayment if there is any change in the Base Rate. Hence, be sure to check with respective banks before making a decision!
What do you think?
Hopefully this post is able to let you have a better understanding on the new Base Rate of Malaysia. If is helpful to you, do Like our Facebook Page (Click Here) to follow for latest personal finance info!
If there's any comment, do feel free to post below.
If there's any comment, do feel free to post below.
Gosh, just accepted the Loan LO a week before the effective date. Shall check with my banker for further advice…..
ReplyDeletegreat! maybe you can share with us too on hows the finding! ;)
DeleteIm still confused on the calculation of effective lending rate...is it will adjusted monthly by the respective bank? It's shows tt ELR is based on BR + Spread.
ReplyDeletewhich means every month borrower have to pay different amount of repayment loan?
Hi Fermy,you are right on the Effective Lending Rate (ELR) = BR + Spread.
DeleteBut no, it is fixed by the bank, so it wont changed or adjusted monthly.
And no, every month borrower doesn't need to pay different amount of repayment loan.
The repayment loan is exactly the same as the previous BLR, the only changes is the name and how it is calculated. ;)
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