National Bank announced a 25 basis points increase in the Overnight Policy Rate (OPR) in early July, and domestic banks followed the National Bank’s lead and increased their lending rates.
The banks raised the base rate (BR) and the basic lending rate (BLR), which will result in borrowers having to bear higher monthly instalments.
For a RM500,000 mortgage, an interest rate increase of 0.25% will result in the borrower having to pay about RM70 more per month. For a RM700,000 mortgage, the additional monthly instalment would be approximately RM110. This is a heavy strain on borrowers who are short of cash.
Borrowers are urged to check with their respective banks on the amount of loan they will be required to pay each month after the interest rate hike, so that they can avoid the problem of defaulting on the loan if they underpay.
