Dear all, would like to invite some discussion to help understanding the differences of the above.

Noticed that there are plenty of Loans offered with BLR minus xx%, but some new breed came to town recently, ie MLR minus yy%, KLIBOR + zz%.

BLR is at 5.55% now, set by BNM and commercial bank will benchmark against it.

MLR is currently used by OCBC i think, 4.7% now, claimed to be set by BNM also, but no other benchmark as no one using.

KLIBOR, usually it's the most basic rates used by banks to borrow/lend to each other. I am guessing this is among the most fundamental rates that the cost of credit.

Islamic loan, a breed that I never understand enough. Please see quote below, and apprecaite some experts can share how islamic loan really works..



Some common questions, how they relate and which one is better??

KLIBOR is updated quarterly, most active index among the list above, it will go both up/down but progressively. As mentioned earlier, one of the most fundamental interest basis for borrowing money. If OPR changed, this will be expected to changed very soon. Fluctuate and react fastest to sentiment of economy, e.g. GDP, inflation, OPR?

BLR determined by BNM, it probably does not move as much as KLIBOR, but should be the same trend as KLIBOR with spread widening/narrowing? BNM decides, probably will be more consumer centric and syphoned off fluctuation due to short term market heat, hence does not move often favoring consumers.

MLR not so familiar, guess it's the same as BLR. Islamic no idea.

Above is my personal understanding, humbly inviting comments and corrections pls.

Thanks, trying to learn with everyone's sharing.

Heard it more than once the mortgage agent telling me it changes on quarterly. Actual KLIBOR should be changing on real time basis, but maybe SCB only reflect the changes once every quarter?? It will be messy to calculate the new installment/interest for each and every customers on real time basis

Personally, I dont favor KLIBOR type, because of its nature of sensitivity to business market sentiment. Until somebody can enlighten me, I still prefer BLR which is control by BNM (protecting consumers). Apologies to any SCB agents

One related question would be, in short to medium term i.e. 1-5 yrs time, do you think interest rate will be trending upwords or downwords.

As long as the interest rate stays stagnant, all the different packages, BLR/MLR/KLIBOR/Islamic should be about the same, since their business were written at around the same time under competitive environment. Question is when interest rate moving away in the future from where we are now, how would that movement impact each type of BLR/MLR/KLIBOR/Islamic assuming you already locked in a certain package today.

It has been mentioned many times, if Buy Buy Buy without thinking thru the hard question of whether i can afford if interest rate goes up by 1 or 2 notch, it is very unwise and scary.

Thanks for the quick case study and very comprehensive extraction of BLR and KLIBOR historical rates.

As some of the observations in your post, the gap between BLR and KLIBOR were smaller ~3.1% when BLR was at 6.75%, but higher now with BLR standing at 5.55%, the gap is 3.4%.
If the trend follows, when interest rate rise again (due to whatsoever reason, especially when inflation inevitably kicks in), BLR will rise and maybe the gap will become smaller again, ~3.1% or smaller.

But looking at your chart, say if over very short period of say 2 yrs, saving 0.25% a year can help subsidise those exit penalties for flippers. But then again, your other post of MLR showing a plan with 3 yrs lock in which will be more appealing for this group of ppl

Disclaimer, for sharing purpose, not suggesting any plan better or worse, please select the plan that suits your risk appetite. Thank you.

Thanks for the updates.
So what is the offer by OCBC now? when it was 4.7%, can do minus 1.2%? now 4.4% do minus 0.9% ??

So we now observes that the MLR and BLR does not move in tandem. OCBC going aggressive on housing loan? any Agents with the latest OCBC offer?

^^ Nevermind, found some example in the current financing package thread. Thanks.

This post has been edited by noed18: Oct 19 2009, 12:40 PM