![\"graph-blc\"](\"\/articles\/wp-content\/uploads\/2013\/03\/graph-blc.jpg\")
<\/a><\/p>\n<\/span>What is it?<\/strong><\/span><\/h2>\nIf you\u2019re a seasoned home buyer, BLR is something that needs little to no introduction. But if you\u2019re applying for a home loan for the very first time, you\u2019re probably wondering what it is and why it\u2019s such a major concern.<\/p>\n
In layman\u2019s terms, BLR is the base interest rate that banks refer to internally before deciding how much to charge (i.e. interest rate) for your home loan.<\/p>\n
However, a more accurate definition of the term is that it is a rate determined by each bank based on how much it costs to borrow the money to be lent to borrowers. The cost to borrow money is determined by the Overnight Policy Rate (OPR) \u2013 the interest rate at which other banks lend to each other.<\/p>\n
Recap: Base Lending Rate (BLR)<\/strong><\/p>\n\n- Determined by Bank Negara Malaysia (BNM)<\/li>\n
- Based on internal cost of funds (i.e. how much it costs to borrow the money to be lent out)<\/li>\n
- Changes to the rate are affected by changes in the OPR<\/li>\n<\/ul>\n
The OPR is determined by BNM which decides whether to move this rate up or down depending on the current state of global economy and its objectives. Generally, it rises when the money market is on an uptrend and falls when the opposite happens.<\/p>\n
<\/span>What does the % mean?<\/strong><\/span><\/h2>\nKnowing what the prevailing BLR is will help you make sense of interest quotations by banks. When seeking for a home loan, banks will often quote an interest rate of BLR plus or minus a percentage.<\/p>\n
Below is an example of how to make sense of interest quotation by banks:<\/p>\n
![\"blr](\"\/articles\/wp-content\/uploads\/blr-table-updated.png\")
<\/a><\/p>\n<\/span>What’s in store in the future?<\/strong><\/span><\/h2>\nWith the recent hike in the OPR<\/a>\u00a0by 25 basis points, most experts are not expecting further hike in 2014.<\/p>\nMalaysian Institute of Economic Research (MIER), a local economic think tank, said\u00a0it is not expecting any further hikes in the OPR for the rest of the year.<\/p>\n
“Real interest rate is in the negative still but there may not be another hike. Not in the immediate future. Twenty-five basis\u00a0points is enough for now,” said MIER ED Dr Zakariah Abdul Rashid in a report on The Malaysian Reserve.<\/em><\/p>\nBank Negara Malaysia has also announced a new interest rate framework known as the Base Rate<\/a> that is set to replace the current BLR rate in 2015.<\/p>\n<\/span>How does the recent hike affect you?<\/strong><\/span><\/h2>\nAny changes would impact floating rate loans which are common for mortgages. While the effect of the new Base Rate framework is still unclear, the increase in OPR has definitely affect the rates charged by banks for home loans for the simple reason that banks adjust their lending rates by a similar quantum when OPR changes.<\/p>\n
![\"hl-620x100-en\"](\"\/articles\/wp-content\/uploads\/2013\/12\/hl-620x100-en.png\")
<\/a><\/p>\nHere is how the increase in the lending rate (as a result of an increase in OPR) has affected your total interest paid if you currently have a floating rate home loan.<\/p>\n
![\"opr\"](\"\/articles\/wp-content\/uploads\/opr.png\")
<\/a><\/p>\nBased on the calculations above, a mere 0.25% increase in lending rate has resulted in a 7% increase in total interest paid over the loan tenure.<\/p>\n
<\/span>What can you, as a borrower, do?<\/strong><\/span><\/h2>\nAs a borrower, you can always negotiate for better rates, especially when you have a strong case to do so. However, this is subject to the following criteria:<\/p>\n
\n- having a good track record with the bank<\/li>\n
- being a priority banking customer<\/li>\n
- having documentations proving you have high net worth<\/li>\n
- buying high-value properties<\/li>\n<\/ul>\n
Ultimately, to better protect yourself from fluctuations in BLR, taking-up or refinancing to a fixed term home loan is a wiser move. iMoney\u2019s home loan calculator and comparison tool<\/a> can help you find the best fixed rate home loan.<\/p>\nUPDATE:<\/strong> The article was updated to reflect the recent OPR hike by 25 bps.\u00a0<\/span><\/p>\n<\/span>Found this article useful? You may also wish to read up on the basics of housing loan in Malaysia<\/a>.<\/strong><\/span><\/h3>\n","protected":false},"excerpt":{"rendered":"
- \n
- Determined by Bank Negara Malaysia (BNM)<\/li>\n
- Based on internal cost of funds (i.e. how much it costs to borrow the money to be lent out)<\/li>\n
- Changes to the rate are affected by changes in the OPR<\/li>\n<\/ul>\n
The OPR is determined by BNM which decides whether to move this rate up or down depending on the current state of global economy and its objectives. Generally, it rises when the money market is on an uptrend and falls when the opposite happens.<\/p>\n
<\/span>What does the % mean?<\/strong><\/span><\/h2>\n
Knowing what the prevailing BLR is will help you make sense of interest quotations by banks. When seeking for a home loan, banks will often quote an interest rate of BLR plus or minus a percentage.<\/p>\n
Below is an example of how to make sense of interest quotation by banks:<\/p>\n
<\/a><\/p>\n<\/span>What’s in store in the future?<\/strong><\/span><\/h2>\n
With the recent hike in the OPR<\/a>\u00a0by 25 basis points, most experts are not expecting further hike in 2014.<\/p>\n
Malaysian Institute of Economic Research (MIER), a local economic think tank, said\u00a0it is not expecting any further hikes in the OPR for the rest of the year.<\/p>\n
“Real interest rate is in the negative still but there may not be another hike. Not in the immediate future. Twenty-five basis\u00a0points is enough for now,” said MIER ED Dr Zakariah Abdul Rashid in a report on The Malaysian Reserve.<\/em><\/p>\n
Bank Negara Malaysia has also announced a new interest rate framework known as the Base Rate<\/a> that is set to replace the current BLR rate in 2015.<\/p>\n
<\/span>How does the recent hike affect you?<\/strong><\/span><\/h2>\n
Any changes would impact floating rate loans which are common for mortgages. While the effect of the new Base Rate framework is still unclear, the increase in OPR has definitely affect the rates charged by banks for home loans for the simple reason that banks adjust their lending rates by a similar quantum when OPR changes.<\/p>\n
<\/a><\/p>\nHere is how the increase in the lending rate (as a result of an increase in OPR) has affected your total interest paid if you currently have a floating rate home loan.<\/p>\n
<\/a><\/p>\nBased on the calculations above, a mere 0.25% increase in lending rate has resulted in a 7% increase in total interest paid over the loan tenure.<\/p>\n
<\/span>What can you, as a borrower, do?<\/strong><\/span><\/h2>\n
As a borrower, you can always negotiate for better rates, especially when you have a strong case to do so. However, this is subject to the following criteria:<\/p>\n
- \n
- having a good track record with the bank<\/li>\n
- being a priority banking customer<\/li>\n
- having documentations proving you have high net worth<\/li>\n
- buying high-value properties<\/li>\n<\/ul>\n
Ultimately, to better protect yourself from fluctuations in BLR, taking-up or refinancing to a fixed term home loan is a wiser move. iMoney\u2019s home loan calculator and comparison tool<\/a> can help you find the best fixed rate home loan.<\/p>\n
UPDATE:<\/strong> The article was updated to reflect the recent OPR hike by 25 bps.\u00a0<\/span><\/p>\n
<\/span>Found this article useful? You may also wish to read up on the basics of housing loan in Malaysia<\/a>.<\/strong><\/span><\/h3>\n","protected":false},"excerpt":{"rendered":"