some quick news on new bank interest rate : Some people wonder why banks and home buyers closely follow the news about Bank Negara Malaysia’s Overnight Policy Rate (OPR). What they don’t know is that this benchmark affects the Based Lending Rate (BLR) of all financial intuitions operating in the country. In short, it influences the interest rate of your loans, especially mortgages. The higher it is, the higher the monthly instalments of your housing loans. Aside from BLR, the OPR also has a direct bearing on the interest rate of your bank deposits, foreign exchange rate, short and long term interest rates, which in turn affect employment levels, cost of goods and services, as well as other aspects of the economy. Changes in 2015 In March 2014, the central bank announced that will introduce a new interest rate framework next year to replace the BLR. Aside from that, this new rate will be utilised for refinancing of existing loans. Known as the Base Rate, this benchmark takes into account various factors, such as a bank’s operating costs, profit margin and cost of funds. Other considerations include the borrowers’ credit risk, liquidity risk premium and the lender’s Statutory Reserve Requirement (SRR) or the amount they need to keep in proportion to their liabilities. The goal of this new benchmark is to bring about greater transparency in the financial industry, as well as improve efficiency and ensure that banks adhere to BNM’s rules. It also aims to increase competition, providing would-be borrowers with more attractive interest rates. Already took out a loan? People who have already taken out a new housing loan before 2 January 2015 shouldn’t fret as their mortgage will be based on the old Base Lending Rate. Even though it will longer be used for loan pricing, its major influencer (OPR) will still be utilised for other economic variables. As such, potential home buyers are advised to seal their purchase and loan agreements before the end of the year. In the meantime we’d like to wish you a peaceful and happy Christmas and a healthy, fulfilling and prosperous 2014.
Posted on: Wed, 31 Dec 2014 04:56:31 +0000
Trending Topics
Recently Viewed Topics
© 2015