malaysia bank rates

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Times are hard, very hard, and the economy has suffered tremendously. As the world threads through a pandemic, a shift within the country’s economic policies will undoubtedly follow as the situation has disrupted various industries, including the property market.

Due to this, adjustments to lower the Overnight Policy Rate (OPR)  – essentially a backbone for monetary policies – have been made. Such changes in the OPR will affect several aspects of all industries. For the property market, the OPR has a direct effect on the Base Rate (BR) of banks.

What is BR and is it different from Base Lending Rate (BLR)?

The BLR is no longer in effect since 2015 as Malaysia has switched to the new BR system. Previously, the BLR, which was also known as the Base Financing Rate (BFR) for Islamic loans, was set based on the health of all financial institutions within the country. This rate essentially sets how much it would cost to lend them money.

The OPR is the interest rate set by Bank Negara Malaysia (BNM) that represents the cost of a bank lending to another bank – this was utilised as a benchmark for the BLR. The BLR was then set through a blanket formula that was calculated based on the Statutory Reserve Requirement (SRR).

However, although that has been replaced with the new BR system, home loans that were taken out prior to 2015 will still follow the BLR unless the property has been refinanced.

Now, with the BR system, banks are allowed to fix their own interest rates based on BNM’s rate, which acts as a benchmark. Banks determine the BR using a set formula, which takes into account the bank’s costs of the fund, the SRR, borrower’s credit risk, liquidity premium, profit margin, cost of funds as well as the operating cost.

The OPR is still referenced with this system as it helps banks determine the interest rates which will affect their lending amount to consumers. Banks usually revised their BR on a quarterly basis.

Why was the OPR lowered and what does this mean for borrowers?

bank interest rate

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As mentioned, the pandemic has caused a stir within the economy and because of this, relaxing measures have to be implemented to help the landscape recover from the Covid-19 hit.

To date, the OPR has been adjusted several times and currently, the OPR is at a historic low of 1.75%  – this has caused banks to reduce their interest rates for home loans to around 3%! With this, the government hopes that this could give people more spending power for items including property purchases and drive the economy into recovery.

This will directly affect the attractiveness of loan offerings by banks, as a lowered OPR could essentially reduce the BR (the loan’s interest rate).

Hence, if your mortgage loan is based on BR, this lowered OPR decreases your loan’s interest rates which will essentially lower your monthly repayment – consumers are usually notified by a letter to inform them of the change in repayment amount.

Banks are also required to reveal their BR and BLR rates for public reference. You can find the latest rates below. 

Better possibility to afford a home loan

With the BR system and the lowered OPR rate, consumers have an opportunity to spend as the government hopes we will.

With the transparency of the BR rates, we can gauge the best potential offer that banks may put on the table and take advantage of the lowered OPR. Currently, the property market has several schemes in place that offer low entry costs (some even offer zero down payment!).

Hence, buying your first, second or third property might be a good idea now – you don’t have to put up too much money first hand and you can enjoy a loan amount with the lowest interest rate to date! Essentially, you can secure an awesome deal as you will save cost!

So, are you thinking of buying a home? Check out Mah Sing’s Eazy to Own, where you do not have to commit too much first hand to secure a home.

The scheme offers zero down payment with 90% financing even on your third property onwards. Also, homebuyers can choose to stay first and own later where the deposit is a mere 1%, or own a home with a booking fee of RM500!

home sweet home

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Visit MahSing Eazy to Own for the full project list and more information.

Latest BR, BLR and Indicative Effective Lending Rate

Here are the rates for your reference. These are based on the latest release by BNM on August 6 2020, below are the current rates:

Note: The Indicative effective lending rate refers to the indicative annual effective lending rate for a standard 30-year housing loan or home financing product with financing amount of RM350,000 and has no lock-in period.

No.           Financial Institution Base Rate (%) Base Lending Rate (%) Indicative Effective Lending Rate (%)
1 Affin Bank Berhad 2.7 5.56 3.3
2 Alliance Bank Malaysia Berhad 2.57 5.42 3.11
3 AmBank (M) Berhad 2.6 5.45 3.25
4 Bangkok Bank Berhad 3.22 5.87 4.42
5 Bank of China (Malaysia) Berhad 2.55 5.35 3.55
6 CIMB Bank Berhad 2.75 5.6 3.5
7 Citibank Berhad 2.4 5.55 3.2
8 Hong Leong Bank Malaysia Berhad 2.63 5.64 3.5
9 HSBC Bank Malaysia Berhad 2.39 5.49 3.5
10 Industrial and Commercial Bank of China (Malaysia) Berhad 2.52 5.45 3.47
11 Malayan Banking Berhad 1.75 5.4 3.25
12 OCBC Bank (Malaysia) Berhad 2.58 5.51 3.45
13 Public Bank Berhad 2.27 5.47 3.1
14 RHB Bank Berhad 2.5 5.45 3.5
15 Standard Chartered Bank Malaysia Berhad 2.27 5.45 3.5
16 United Overseas Bank (Malaysia) Bhd. 2.61 5.57 3.3

Islamic Financial Institutions

No. Financial Institution Base Rate (%) Base Lending Rate (%) Indicative Effective Lending Rate* (%)
1 Affin Islamic Bank Berhad 2.70 5.56 3.30
2 Al Rajhi Banking & Investment Corporation (Malaysia) Berhad

 

2.85 5.75 4.20
3 Alliance Islamic Bank Berhad

 

2.57 5.42 3.11
4 AmBank Islamic Berhad

 

2.60 5.45 3.25
5 Bank Islam Malaysia Berhad 2.52 5.47 3.25
6 Bank Muamalat Malaysia Berhad

 

2.56 5.56 3.56
7 CIMB Islamic Bank Berhad

 

2.75 5.60 3.50
8 Hong Leong Islamic Bank Berhad

 

2.63 5.64 3.35
9 HSBC Amanah Malaysia Berhad

 

2.39 5.49 3.50
10 Kuwait Finance House (Malaysia) Berhad

 

2.25 6.24 3.30
11 Maybank Islamic Berhad

 

1.75 5.40 3.25
12 MBSB Bank Berhad

 

2.65 5.5 3.2
13 OCBC Al-Amin Bank Berhad

 

2.58 5.52 3.45
14 Public Islamic Bank Berhad

 

2.27 5.47 3.1
15 RHB Islamic Bank Berhad

 

2.5 5.45 3.5
16 Standard Chartered Saadiq Berhad

 

2.27 5.45 3.5

Development Financial Institution

No.           Financial Institution Base Rate (%) Base Lending Rate (%) Indicative Effective Lending Rate* (%)
1 Bank Kerjasama Rakyat Malaysia Berhad 2.6 5.58 3.4
2 Bank Pertanian Malaysia Berhad (Agrobank) 2.35 5.5
3 Bank Simpanan Nasional 2.6 5.35 3.1