Domestic banks will use a new lending framework, Standardised Base Rate (SBR), to replace the current Base Rate (BR) from August 1.
According to a statement issued by Hong Leong Bank, the SBR will be applied to floating and restructured loans approved from August 1, 2022, in line with the lending framework announced by the National Bank on August 11 last year.
The SBR will be directly linked to the Overnight Policy Rate (OPR), which is applicable only to individual loans and not to non-individual loans.
According to Bank Negara’s announcement last August, the current Base Rate (BR) lending framework will begin to be replaced by the Standardised Base Rate (SBR). The existing Base Rate lacks comparability and transparency, as each bank uses a different Base Rate, making it confusing and difficult for lenders to compare the rates offered by each bank.
The new Standardised Base Rate will be more transparent, making it easier for lenders to understand the changes in interest rates and repayment amounts of their loans. If the OPR increases by 0.25%, the SBR will also increase by 0.25%.
SBR applies to variable rate loans, not to fixed rate loans. With a uniform reference SBR rate, it will be easier for borrowers to see which bank is offering a more attractive rate.
