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> Mortgage Loan Package Inquiries, (Strictly NO Promotion Allowed)

lifebalance
post Today, 09:09 PM

Life & Mortgage Planner
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Joined: Nov 2014

QUOTE(ramshackle @ Apr 19 2018, 09:05 PM)
Dear all,

Just signed and paid booking fees for a condo (subsale) and i m currently doing research on the loan package offered by the banks.

I have a question regarding bank base rate (BR) and the spread rate (SP).

Checked with MBB and they can offer me the best rate i.e. 4.47% (which is BR 3.25%+  SP 1.22%).

Another bank officer told me that notwithstanding that MBB can offer the lowest effective interest rate 4.47%, their SP is very high (i.e. 1.22% , in another words, 1.22% will be fixed for the entire loan tenure).

The bank can offer me 4.50% (which is BR 3.9% + 0.6% SP).

The bank officer told me that their interest rate, even though is higher than MBB (4.50% vs 4.47%) is better than MBB as (1) their SP is lower (2) MBB BR is the lowest and it is unlikly to go lower whereelse their bank got potential to lower the BR.

Can i know whether the statement above is correct? Which bank should i go to? MBB (4.47% (BR 3.25%+  SP 1.22%).) or another bank (4.50% BR3.90%+ SP0.6%)?

Many thanks.
*
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

Hope I've answered ur question
ramshackle
post Today, 09:16 PM

New Member
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Group: Junior Member
Posts: 12

Joined: Jun 2009


Hi Keith, many thanks for the prompt response.

If thats the case, i should opt for the lowest ELR which is MBB?
Thanks.


QUOTE(lifebalance @ Apr 19 2018, 09:09 PM)
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

Hope I've answered ur question
*
lifebalance
post Today, 09:17 PM

Life & Mortgage Planner
*******
Group: Senior Member
Posts: 5,400

Joined: Nov 2014

QUOTE(ramshackle @ Apr 19 2018, 09:16 PM)
Hi Keith, many thanks for the prompt response.

If thats the case, i should opt for the lowest ELR which is MBB?
Thanks.
*
Yep in this case 4.47% is a win against 4.50
ramshackle
post Today, 09:21 PM

New Member
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Group: Junior Member
Posts: 12

Joined: Jun 2009



Thanks!!!

Another quick question, i explained to another Bank officer that since my salary acc is with MBB, i prefer to get housing loan from MBB, but he advise me to separate my housing loan acc with my salary acc as, in the event something happen to me and i m not able to repay loan on time, MBB will sapu my saving in my MBB acc if i have the housing loan acc with them.

Should that be a consideration in choosing a housing loan? i.e to have the housing loan acc separate from my salary acc/saving acc by using a diff bank?


QUOTE(lifebalance @ Apr 19 2018, 09:17 PM)
Yep in this case 4.47% is a win against 4.50
*
lifebalance
post Today, 09:24 PM

Life & Mortgage Planner
*******
Group: Senior Member
Posts: 5,400

Joined: Nov 2014

QUOTE(ramshackle @ Apr 19 2018, 09:21 PM)
Thanks!!!

Another quick question, i explained to another Bank officer that since my salary acc is with MBB, i prefer to get housing loan from MBB, but he advise me to separate my housing loan acc with my salary acc as, in the event something happen to me and i m not able to repay loan on time, MBB will sapu my saving in my MBB acc if i have the housing loan acc with them.

Should  that be a consideration in choosing a housing loan? i.e to have the housing loan acc separate from my salary acc/saving acc by using a diff bank?
*
biggrin.gif doesn't really matter, the bank will auction your property if you decide not to pay, you'll lose all your initial investment. You got more to lose than the bank

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