Base Lending Rates

Base Lending Rate (BLR) is a minimum interest rate calculated by financial institutions based on a formula which takes into account the institutions’ cost of funds and other administrative cost. The rate is determined by each bank based on how much it costs to borrow the money to be lent to borrowers. The cost to borrow money is determined by the Overnight Policy Rate (OPR) set by Bank Negara Malaysia which decides whether to move the OPR up or down depending on the current state of the global economy. The rate will generally rise when the money market is on an uptrend and falls when the opposite happens.

Currently, Malaysia’s BLR stands at 6.85%. The highest Malaysia BLR recorded was 12.27% in 1998 and the lowest was 5.55% in 2009. The table below shows the Malaysia BLR record from 2008 to 2014.

Year

BLR (%)

Remark

2014

6.85

Updated on 17 July 2014

2013

6.60

2012

6.60

2011

6.60

Adjusted on May 2011

2010

6.30

Adjusted on July 2010

2010

6.05

Adjusted on May 2010

2010

5.80

Adjusted on March 2010

2009

5.55

2008

6.75

Adjusted on March 2009

 

Example of BLR calculation for home loan:

The current BLR rate is 6.85% and the bank loan package is 6.85% – 2.65% = 4.2% p.a. with loan tenure can range anytime up to maximum 35 years.House price                 RM400,000
Down payment            RM40,000
Interest rate                BLR 6.85% – 2.65% = 4.2% p.a.  
Loan financing            90%
Loan tenure                 35 years

Minimum monthly repayment @ RM1,637

Source: Bank Negara Malaysia  

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