Tuesday, September 28, 2010

Interest Rate (OPR vs FDR vs BLR etc...)

There are so many terminology on "interest rate".

OPR = Overnight Policy Rate
FDR = Fixed Deposit Rate
BLR = Base Lending Rate

From Wikipedia:

Overnight Policy Rate is an overnight interest rate set by Bank Negara Malaysia (BNM) used for monetary policy direction. It is the target rate for the day-to-day liquidity operations of the BNM.[1]

Base Lending Rate is a base interest rate calculated by financial institutions according to a formula which takes into account the institutions cost of funds and other administrative costs. The actual rate charge to the lending will subject to various factors like customer credit status, the size of lending etc. For a clean loan, bank may charge up to BLR+5% while for mortgage, bank only charge BLR - 2.3%.

During the year 2010, BLR has increased THREE (3) times as follows:
First (March 2010) = 5.55% to 5.80%
Second (May 2010) = 5.80% to 6.05%
Third (July 2010) = 6.05% to 6.30%

Those who borrows money in BLR will suffers additional borrowing costs in year 2010.

Click here for table of interest rates.