BY Livian Lin
KUALA LUMPUR – Although Bank Negara Malaysia’s (BNM) overnight policy rate (OPR) reduction was warmly greeted by the general public, the real test of any positive impact lies in how quickly banks embrace the rate changes and aggressively promote the new rates.
On this count, some have moved faster than others, prompting BNM to issue a directive this week that all banks will now be required to revise interest rates within seven working days of any OPR decision. This was in response to complaints that some banks took up to two weeks to revise their rates following last month’s cut of 25 basis points.
Some banks were certainly quicker than others to embrace the change, while a number of banks have only just announced revised rates.
Despite CIMB Investment Bank Berhad’s seemingly defiant statement to the press that the move would reduce the bank’s 2017 financial year nett profit by 5 per cent, it also didn’t take long to reduce its base rate (BR) to 3.9 per cent from 4.1 per cent per annum and it’s base financing rate (BFR) from 6.75 per cent 6.95 per cent.
Group Chief Executive of CIMB Group Tengku Datuk Sri Zafrul Aziz also clarified its support for the OPR cut, saying it would “encourage investments and is favourable to borrowers and consumers to improve prospects moving forward”.
Maybank reaction was much quicker, lowering its interest rate to 3 per cent from 3.20 per cent and it’s BFR from 6.85 per cent to 6.65 per cent just a day after the BNM announcement. Ambank followed suit with a new 3.80 per cent BR and 6.65 per cent BFR.
Before the end of July, Public Bank and Public Islamic Bank announced new BR rates of 3.52 per cent and a BFR rate of 6.72 per cent per annum, and RHB Banking Group announced new rates of 3.80 per cent BR and 6.75 per cent BFR
International Banks have also revised their rates, HSBC and HSBC Amanah announced its new rates of 3.50 per cent BR and 6.60 per cent BLR on its website, while Standard Chartered revised its BR to 3.52 from 3.77 and BFR to 6.70 per cent. OCBC Al-Amin’s revised rates are 3.72 per cent BR and 6.65 per cent BFR.
Although some have announced lowered deposit interest rates, most have maintained the added support of flexible loan repayment and tenure, waiver of processing fees and/or stamp duty and varied home financing plans.
By large, the margin of financing (90 per cent) remains unchanged across the spectrum, as well as the tenure (up to 35 years or 70 years of age, whichever first).
However, market observers say it remains to be seen if banks have increased or reduced stringency on new applications, as the ability to secure a mortgage is ultimately the key deciding factor on whether the market can be reinvigorated.