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BNM Increased OPR to 2.75%: How Will it Affect Your Housing Loans? (UPDATED)

UPDATED: On 03 November 2022, Bank Negara Malaysia announced the increase of the Overnight Policy Rate (OPR) by another 25 bps from 2.5% to 2.75%.

On 08 September 2022, Bank Negara Malaysia announced the increase of the Overnight Policy Rate (OPR) by 25 bps from 2.25% to 2.5%.

Earlier on 11 May 2022, Bank Negara Malaysia announced the increase of the Overnight Policy Rate (OPR) by 25 bps from 1.75% to 2%, in line with “the sustained reopening of the global economy and the improvement in labour market conditions continue to support the recovery of economic activity”.

What does this mean to home buyers and businesses?

A higher OPR means that the borrowing cost will become more expensive for consumers. Banks will revise the costs following the increase in OPR by BNM, resulting in higher interest rates for home buyers and businesses. The higher cost can limit personal and commercial access to capital.

The increase in OPR results in:

1. Higher monthly instalment payments

The higher interest rates make the cost of borrowing more expensive, resulting in a hike in monthly instalment payments.

2. Longer loan tenure

Thanks to the increase in the monthly installment amount, the repayment period will be extended if the old sum is maintained.

Since most housing loans in Malaysia are Full Flexi Loans or Semi Flexi Loans, this means that your monthly payment will fluctuate with the rise and fall of OPR.

The chart below shows a rough idea of the changes in monthly payments after the OPR increase:

Previously, When Banks Increased Interest Rates

Maybank, RHB Banking Group to increase BR, BLR by 25bps – The Edge Markets (11.05.2022)

Maybank noted its BR will be raised from 1.75% per annum (p.a.) to 2% p.a. while its BLR will be revised from 5.4% p.a to 5.65% p.a. Similarly, Maybank’s Islamic BR and base financing rate (BFR) will be increased by 25bps from 1.75% p.a. to 2% p.a. and from 5.4% p.a. to 5.65% p.a. respectively.

Meanwhile, RHB Bank Bhd, RHB Islamic Bank Bhd and RHB Investment Bank Bhd will increase BR from 2.5% p.a. to 2.75% p.a., and will also revise the BLR and BFR from 5.45% to 5.7% per annum, respectively.

Maybank said it will revise upwards its rate effective May 13, while RHB will be doing so on May 18, according to their respective statements.

CIMB increases rates by 25bps effective May 18 – The Edge Markets (12.05.2022)

CIMB Bank Bhd and CIMB Islamic Bank Bhd will effect a corresponding 25-basis-point (bps) increase in their base rate and fixed deposit/fixed return income account-i board rates effective May 18.

Public Bank, Public Islamic Bank to increase its base rate by 25 bps effective Friday – The Edge Markets (12.05.2022)

Public Bank Bhd will increase its base rate (BR) and base lending rate (BLR)/base financing rate (BFR) by 0.25% effective May 13.

With this, the BR will be at 2.52% from 2.27%, and the BLR/BFR will be at 5.72% from 5.47%,” it said in a statement.

Credits to:
Andy Foong, IQI Real Estate Negotiator

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