With regards to BLR, banks no longer run on BLR already, it's on Base Rate right now.
Previously, BLR changed according to the Overnight Policy Rate (OPR), which is determined by Bank Negara Malaysia from time to time.
The BR is dependent on banks’ benchmark cost of funds and liquidity. Banks can also review it anytime if there are no changes in the OPR.
With the BR, interest rates are determined by banks’ benchmark cost of funds and Statutory Reserve Requirement (SRR).
BR should differ from bank to bank depending on their own efficiencies in lending.
1) BR will depend on the SRR determined by Bank Negara. It is the minimum level of reserves required for each bank to retain before lending out. If the central bank increases the SRR, the cost of lending will increase. You will notice that BR also increases.
2) The “Spread Rate” above the BR will be determined by the borrower’s credit risk, liquidity, operating cost and profit margin. If the bank’s profit were to increase, the BR would be reduced.
3) Correlation with the OPR. If Bank Negara increases the OPR, the BR will also increase.
BR is a floating rate. That means it could go up or down due to the above reasons.
“The spread is fixed. If we add this two we will get the Effective Lending Rate (ELR). Every bank has a different BR. So, is the BR the determining factor when you choose which bank to take a loan facility from?
“The lowest BR does not necessarily mean the lowest interest rate. It also depends on the spread. BR can be low but the spread can be very high. We have to look at the ELR to determine which package to take
Since 3 of them offer the same rate, pick 1 which you think has the following
1. Convenient in online banking
2. Branches nearby you
3. Charges incurred by the loan facility
5. Lock in period
6. Prepayment to your loan
Seems okay to me for the loan amount that you're applying for.
You may pay extra every month whenever you have extra money to reduce your interest overtime.
The extra payment will help you to reduce your loan tenure because you've incurred less interest by paying more towards your loan principle.
If you pay just minimum installment amount then you'll definitely incur more interest overtime in 15 years.
For e.g. if one day mbx feels the cost has increased,so they revise BR to 3.5%,so my interest rate will significantly increase to 4.8%