The adoption of the SBR lending framework by Bank Negara in August will make it easier for borrowers to compare the interest rates offered by various banks.
According to Bank Negara, a new lending framework, known as SBR, will be introduced in August 2022, which will replace the current Base Rate (BR).
Once the national bank adopts the SBR lending framework in August, borrowers will be able to directly understand the profitability of each bank when comparing the lending rates of each bank. The new lending framework will be Effective Lending Rate = SBR + Spread.
Each bank will be required to follow the SBR set by the National Bank, i.e. the OPR of the National Bank will be used as the standard. It is up to the bank to determine the Spread, i.e. the profit.
For example, if Bank A offers a 3.25% loan rate and the SBR is 1.75%, then you know that Bank A’s profit is 1.50%. If Bank B offers a 3.75% loan rate and the SBR is 1.75%, then Bank B’s profit is 2.00%.
From this example, you know that Bank A offers a more attractive loan rate.
