Mar 11, 2010
Experts' opinion: Impact of BLR on the rise
Bank Negara Malaysia (BNM) raised its Overnight Policy Rate (OPR) by 25 basis points (bps) to 2.25% after keeping it at 2% for seven consecutive monetary policy committee (MPC) meetings since April 2009. Following this increment, banks are now adjusting the Base Lending Rate (BLR) from 5.55% to 5.8% per annum.
StarProperty.my asked four industry experts whether this change will affect borrowers’ decision.
Michael Tan, Mortgage Planner, Paysolution Technologies Sdn Bhd
Bank Negara has just raised the Overnight Policy Rate (OPR) by 25 basis points (bps) on 4th March. Now, some banks are increasing the BLR as well, which is expected. Give your thoughts on that.
In retrospect, this is good news. We believe the current increase in the OPR by bank Negara is due to indications that the economy is recovering. With regards to the property market, the 1st quarter of the year reflected healthy numbers in terms of property transactions. The same reasons lead to the reduction of discounted housing interest rates by the banks last quarter of 2009.
Should this gradual trend progress, it reflects an even recovery of the country’s economy from the recent global economic turmoil. However, we should also expect the banks to take profits soon and therefore, increase the interest rates. However, the increase in the BLR will be gradual and should not be higher than the OPR 25pts.
Can you give us your prediction on how much BLR will increase over the next 1-2 years? Also the trend to expect?
Should the economy continue its slow and steady recovery, it is safe to say that the rates will continue to adjust upwards. We should be looking for at least ONE or TWO more revisions in the rates for the next quarters. Beyond this, I am unable to forecast.
However, it would be safe to say that the rates will be adjusted to pre-crisis levels of 6.5% - 6.75%. There is not much indication at the moment to show that the government or financial institutions will hike up the rates to 1998 – 2001 levels of 12-13%!
--------------------
Roy Teo, Mortgage Consultant, Mortgage Broker Sdn Bhd
Is it advisable to go for fixed rate during this period?
Whether or not to take fixed rate depends more on the individual's financial profile and purpose for buying the property. Since the BLR may be ‘normalised’ again this year, it is advisable to go for fixed rate, especially when one is buying for own stay without needing any special requirements.
This way you can lock the low rate for some time.
Which bank offers the best fixed rate?
The notable one in the market at the moment is Maybank’s fixed rate of 3.75% for 3 years. In this case, when OPR or BLR increases, you can still lock the interest rate at 3.75% over the next 3 years.
After 3 years, it reverts to BLR-1.8%. Maybank also offers fixed 5 and 10 years but at higher interest rate, so I don't recommend it. If a customer wants fixed rate longer than 3 years, I would recommend them to get it from AIA or ING fixed for the entire tenure. Their rate is 4.99% per annum.
--------------------
Victor Lim, Managing Director, iProp Realty Kuala Lumpur
How will the increased BLR affect the property sector?
This is definitely not good news for property buyers. However, despite the rate hike, I feel that the property sector for 2010 will remain strong due to the following reasons:
1. Property prices have been stable for the past few years. Many people believed that in 2010 property prices will increase, therefore people are rushing to buy to avoid paying a higher price later.
2. The positive economy outlook of 2010 from analysts has become a driving force for many property buyers.
3. Even if Bank Negara increases OPR by 75bps by the end of 2010, the rate is still significantly lower than that in year 2008 (average of 6.75 % p.a.).
--------------------
Juanita Chin, Head of Project Marketing, Reapfield Penang and author of “Inspired To Change”
How will the increased BLR affect the property sector?
The increase will not affect the property sector greatly. Properties built by reputable developers at well located areas will still be sought after in spite of the increase in rates.
Other stories:
|