Homebuyers Benefit from Rate Cut

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Homebuyers Benefit from Rate Cut

Homeowners can now access better home loan deals thanks to the low-rate environment the Bank Negara Malaysia has created.

Cheaper funding has helped banks cut the interest rates charged to consumers. Bank Negara Malaysia (BNM) lowered the overnight policy rate (OPR), by 50 basis points, to 2% on May 5, 2020. This is the OPR’s lowest point since 2010.

What do the changes mean to your home loan and why are the OPR changes important to you? Learn more below.

What is OPR?
The Overnight Policy Rate is the interest rate at which a bank lends to another bank, which is determined by Bank Negara Malaysia (BNM).

For Properties 
For buyers who are looking for new home loans, when the OPR goes down, it means you are able to get a lower interest rate home loan from a bank.

How will it affect to your home loan?
In Malaysia, most homebuyers spend 30 years paying off their home loan. Don’t underestimate the differences of few percents in the interest rate of loans; you will have to pay a large amount of money in 30 years.

Let’s see how interest revisions impact your loan/ financing repayment.

If you borrow RM500,000, and the previous bank interest rate is 3.5%, and now after the OPR cut it is 3%; although the difference is only 0.5%, reducing the loan to RM144.57 per month but in the long term, over 30 years, you can save up to more than RM52,045.37. Which means saving around 6% per month in interest payments and around 13% over the loan period.

Existing Loan
If you have ongoing loan installments, take note on whether there is any adjustment on your monthly installment. Generally, after the OPR adjustment, the bank will follow the interest rate. If you do not receive a notification within three or four months contact your banker and get confirmation on changes on BR rates and monthly installments.

Applying for a New Loan
If you are planning for your future home, this could be the best time for you to be looking for a new home because OPR cut leads to interest cut as well.

Kinta Properties Sales Manager, Karen Wong said, “Many of our new homebuyers have been pouncing on the incredible rates, realising that now is a very good time to borrow money and buy a new home.”

You can tour new homes on our virtual tour platform. Still confused? Chat with the Kinta Properties team at 0125008018, every day we answer new homes and property loans questions. We’re here to help get the right home and loan for you.

The list below is Base Rates and Effective Lending Rates of Financial Institutions as at 12 May 2020, release by BNM.

*An example of a standard housing loan refers to a loan facility with a financing amount of RM350,000 for 30 years and has no lock-in period.