Effective 2 Jan 2015, the Base Rate (BR) will replace the Base Lending Rate (BLR) as the main reference rate for new retail floating rate loans for individual customer.
The objectives:
Promote informed decision making
Encourage more disciplined and efficient practices in the pricing of retail loan
Better reflect changes in the cost of funds arising from monetary policy or market funding conditions
Base Rate is made up of 2 parts, our benchmark cost of funds (COF) and the Statutory Reserve Requirement (SRR) cost imposed by Bank Negara Malaysia. Our benchmark COF now reflects the cost of raising new funds in prevailing market funding conditions based on the 3-month KLIBOR as well as customer deposit rates.
Before 2 Jan 2015
From 2 Jan 2015
Base Lending Rate
Loans extended prior to 2 January 2015 continue to be referenced against the Base Lending Rate (BLR) or Islamic Financing Rate (IFR) until their maturities.
Base Rate
Effective 2 January 2015, a new reference rate known as the Base Rate (BR) will be used for new floating rate loans / financing facilities for individual applicant.
Effective on 2 January 2015
The move to BR does not affect Effective Lending Rates
Compare the effective lending rates quoted by different financial institutions before taking out a new loan.
Ask for a Product Disclosure Sheet (PDS) providing you with the effective lending rate and total repayments amounts for the loan/financing facilities you plan to take out.
Ask your financial institution to explain the factors which may lead to a change in the Base Rate.
Your monthly repayment amount will increase or decrease when there is a change in the Base Rate.
You should also assess whether you can continue to afford the loan repayment if the lending rate increases in future.
