Which Home Loan To Opt For?

Mar 28 2011

Which Home Loan To Opt For? Posted by Thinkproperty.my News Team in The Star, News

Extract from The Star (26/03/11) A HOME buyer with a floating interest rate home loan may feel slightly unnerved in a rising interest rate environment. Just in a span of five months, Bank Negara had raised the overnight policy rate (OPR) by 75 basis points to 2.75% last year and local economists expect the central bank to raise the OPR further in the second half of this year. As the OPR moves up, banks will also look to increase their base lending rates (BLRs) and a higher BLR will undoubtedly have an impact on a floating rate housing loan. BLR is typically defined as a minimum interest rate charged by banks after considering its cost of funds and other administrative costs.  As most floating rate loans track the BLR, the interest charged will fluctuate based on the rise and fall of the BLR throughout the tenure of the loan while a fixed home loan ensures that the interest charged is fixed throughout the loan's tenure. So how do you make a decision on which home loan to opt for, be it fixed or floating?

For new homeowners, fixed rate loans may be a good alternative provided they are able to lock in when interest rates are still low.