i've survey around for the current rate that bank is giving. it's roughly around BLR-2% for the whole tenure, which is around 3.5%. and i got an offer of 4.99% fix rate for the whole tenure. My question is, which should i choose??

LOL!!

if i choose BLR-2, when the economy recovered, and BLR shoot up to 8% i will be making a lose. if i choose FIX RATE and the BLR never ever shoot over 7%, then i am making a lose as well. DAMN gambling.

my question is, does bank negara limited the rate of BLR or they can anyhow shoot up and down as they like?

BLR moves according to the OPR set by BNM. Currently OPR is 2%, and expected to be cut again in this year to 1.5%. So the most OPR can be cut is 0% only. So it basically give you an idea the potential lowest BLR can go.
BLR is not something adopted or changed by the banks simply.

Fix rate has it advatange, aka you know how much you have to pay for the loan all together. But you lose if BLR continue to go down. This is particularly good for those need to have control on their cashflow and budget on their payment for the loan for the whole tenure. You don't need to worry if BLR goes up resulted you need to look for extra money to pay for it, or the loan tenure being stressed to longer term if BLR goes up.

While variable rate, you can save a lot if BLR going down compared to those wih fixed one. But you are exposed yourself to upside risk of BLR.

So choose one that is suit to yours should be the justification and needs, not which is better or not.

for sure i will choose the 1 tat will help me to save more.

what's the prediction of BLR in this coming 30 years? and what's the highest value that the BLR will goes?

does BLR got any ceiling limit?

Well, if u want my 2 cents - I'd only take fixed rates in a high interest rate environment - which we're NOT in at the moment. Even then, I think i'll pass on Fixed rates from AIA or ING.

Look, IMHO

1. Most people are very naive when they take a mortgage for the first time.. Let's get real - only a small tiny minority of people hold a mortgage for 30 years or more. In fact, studies have indicated that the acturial life of a loan with any one bank is approximately 6 years. Could be less by now.

2. I'll tell you what I'm doing. You decide which is best for you, as I'm not qualified to give u a perscription. I'll NEVER take a fixed rate with AIA or ING again, as it doesn't suit my investment philosophy.

(a) I'm only paying 3.5% on my BLR loan now, vs 5.99% on a fixed rate with AIA. The OPR could afford to go up by a freaking 2.49% for me to be on par.......very unlikely in the next 2 to 3 years.

(b) and even if BLR does shoot up one fine day - refinance lah to another competitive package. Do your math of course - the interest savings must be much better than your early penalty fees. It's alarming that most people don't even know how to calculate the cost benefit analysis. They just stick to their loan because of the fear caused by their "lock-in" period.

© I cash out most of the time, as I'm an investor. Fixed Rate loans from AIA and ING do not give me a mortgage one or Savelink feature. In fact, their top up policies suck big time and then don't have chequing features....very depressing stuff for me.

Just my opinion guys. Don't bang me. I need mortgages that suit my investment philosophy. Fixed rates isn't one of them.

This post has been edited by Phoeni_142: Mar 9 2009, 10:05 PM

i am not an investor and i never planned to take the current account into my loan. as wat i know, if i do refinancing, another lawyer fee occur. AIA now is offering 4.99% and conventional is average BLR-2%.

still struggling to choice between 2 of them... not going toss a coin for this luck.

well, chief.

U don't have to be an investor. Read points 2 (a) and (b)

Finally, when u do refinancing - nothing stopping u from choosing a ZEC package to solve your "lawyer fees".

This post has been edited by Phoeni_142: Mar 9 2009, 11:04 PM

If you are interested only btw conventional loan or fixed rate loan you can consider KLIBOR offered by SCB. Its something like a term loan.

KlIBOR?? SCB??

SCB = Standard Chartered...

for me, i will go for conventional loan... as i reckon the economy will not be recovered for at least 2-3 years. thus the readjustment of BLR will only occur by then

furthermore, u will hv 5 years lock-in only. not issue for the refinancing later

u opt to remember that for the first few years, ur loaned amount is the highest
3.5% vs 5.99% of 300k
vs
(after 5 years & we assume that the BLR hv changed) 4.5% vs 5.99% of 200k

u do the math

KLIBOR?

http://www.standardchartered.com.my/cb/loa...or/default.html

This post has been edited by b00n: Mar 12 2009, 09:28 AM