Nov
20

What is Base Lending Rate (BLR)?

These are the basic information that every home buyer should equip themselves with pertaining to Base Lending Rate.

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What is Base Lending Rate (BLR)?

  • A minimum interest rate calculated by financial institutions based on a formula which takes into account the institutions cost of funds and other administrative costs.
  • Typically similar amongst major banks.
  • Adjustments to the BLR are made by banks at the almost same time, though not regularly.
  • BLR adjustments correlate with adjustments of the Overnight Policy Rate (OPR) which is determined by Bank Negara Malaysia (BNM) during Monetary Policy Meeting
  • Effective 1 November 1995, BNM imposed a ceiling on the BLRs quoted by banking institutions. The ceiling rate would be determined by a formula. This framework was further revised on 1 September 1998 to enhance the speed of transmission of changes in BNM’s monetary policy (via revisions to intervention rate and SSR) to changes in the economy’s interest rate levels.
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What is the general formula to calculate the ceiling BLR in Malaysia?

Ceiling BLR = Adjusted BNM Intervention Rate + Fixed administrative charge

 

Commercial banks
Adjsted BNM Intervention Rate = BNM Intervention Rate x 80% / (1-SRR%)

 

Finance companies
Adjusted BNM Intervention Rate = BNM Intervention Rate / (1-SRR%)

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What’s the current BLR?
6.60% (as at 20 Nov 2012)

 

BLR since year 1980 to year 2012

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