Finances

Surprisingly, Bank Negara Malaysia cuts the benchmark Overnight Policy Rate ( OPR ) by 25 basis point to 3% today amid challenging global outlook mainly due to BREXIT. Coincidentally, BNM is making OPR changes in the month of July again. And, this is the first OPR changes under new BNM governor. Okay. Let's us know who will be the winner and loser during lower interest rate environment. Winner : Property Developer Cheaper cost of borrowing for new project financing or lower loan interest rate installment for borrowers. This is the direct beneficiary as we all know. And, it's crucial for the revival of property markets after a spell of subdue market. REITs Real estate investment trusts benefits from lower interest rate being charged by banks. Thus, higher net rental yields and income distributions being anticipated. Bond This is where conservative investors park their money, after fixed deposit, which will have a lower rate after this. Bond prices will increase on spiking deman...

Everyone are anxiously waiting for the outcome of Federal Reserve of US (FED) tonight. If the rate was really raised, it will be the turning point of the interest rate direction. Should FED make the decision to hike it, is it good or bad for the global economy? And most importantly, how is it going to impact Malaysia? It's not news anymore since we're talking about this FED rate hike issue one and half year ago. But, the fact is, it does really has a great impact to the world economy, and Malaysia cannot spare from it either. Generally, below is the 3 possible outcome of 16th Dec 2015 and the possible reactions of global markets: Unchanged Although this is unlikely this round, yet FED still has the chance to remained unchanged and keep it for the next round. While most of us already factored in the effect of raising interest rate, this outcome would make the whole global markets to react positively (although it maybe short lived until the next FED meeting). Merry Xmas and happ...

New year always come with some new changes. In 2015, we have this thing called " Base Rate " (BR) which will replace the previous Base Lending Rate (BLR) we commonly used for years. What does it mean? What are the differences? How much is the rate actually? The new system of pricing... With the new base rate, banks are allowed to price their loans products more efficiently based on their ability. How is the computation method being used for base rate? Read our previous explanation here ... The New Rate for different banks... * Indicative Effective Lending Rate refers to the indicative annual effective lending rate for a standard 30-year housing loan/home financing product with financing amount of RM350k and has no lock-in period. * Data sourced from Bank Negara Malaysia on 2nd Jan 2015. The LOWEST Rate is Maybank? Yes. Maybank set it's base rate to 3.20% , the lowest among all the banks currently. And, guess what? This was already explained and predicted by Finance Malays...

In anticipation of rising interest rate environment, would fixed-rate loans be a better option for borrowers? To recap, Bank Negara Malaysia, for the first time since 2011, raised the benchmark reference rate OPR to 3.25% in July 2014. While many anticipate that there will be another round of hiking soon, should loan borrowers opt for fixed rate loan? What is Fixed-Rate loan? By fixing your interest rate upfront, fixed rate loans protect borrowers from future increases in Base Lending Rate (BLR). In other word, the repayment amount will not be changed during the entire loan period. Who is suitable for fixed rate loan? Perhaps, if you are looking to avoid any volatility , in terms of interest rate movements, you may opt for fixed rate loan. However, it's not necessarily so in terms of paying lower interest rate.  Why say so? Normally, the interest rate on a fixed rate loan was set slightly above what you would be quoted for a floating rate. So, if the financial institutions ...

Once again, we came back to this topic again. The Fixed Deposit promotion offered by various banks lately. Since FD seems to be a form of liability to banks (because banks need to pay depositors interest rate no matter rainy or shiny days), why they still launching FD promotions? What's the rationale behind? Exposing the mystery ... Implementation of Basel series: The main objective of these series was to strengthen the existing capital and liquidity standard of banks as set and governed by Bank Negara Malaysia. With these series, banks would need to have more capital and liquidity to continue their main business in disbursing loans. So, they need our money being locked for a longer period via FD. In anticipation of higher interest rate: Yes. This is another main reason why banks offering attractive FD rate to tie up your money. Because they foresee that BNM will raise the OPR rate, hence FD rate in the future will rise in tandem. What's wrong if I offer you effective 9 month...

When Bank Negara Malaysia (BNM) announcing that the new Base Rate will replace the current Base Lending Rate (BLR) starting 2015, many people doesn't know what's that. Is it a good thing or is it just another gimmick to increase the lending rate? Here, Finance Malaysia Blog hope to answer some of the queries posted by our followers... First, let us figure out why BNM wanted to change the reference rate. It was being told that the objective is to promote better transparency, pricing discipline and efficiency among financial players. Second, how was the new Base Rate being determined? Third, good or bad ? In fact, it was a good thing to retail borrowers since the new Base Rate would be partially determined by efficiency of financial institutions. Finance Malaysia opines that those big banks will have a better pricing power compared to smaller banks, because their cost of funding is usually lower via current/saving account (CASA). That's the cheapest cost of funding for any ...