I just did a search on the history of our Base Lending Rate for the past 33 years as stipulated by the Central Bank and found that this year's BLR which is currently at 5.55% per annum is the lowest.
Certainly, this is a very attractive rate for loan applicants either for an overdraft against Fixed Deposit or for a home loan where the interest rate per annum is BLR minus x%, a rate that differs from bank to bank. As mentioned in a previous post, CIMB Bank is offering me a rate of 3.55% per annum for OD against FD.
However, while this may spur loans, this will also create unnecessary loan takers who may think that they could service their loans at this low rate. I have to admit that I am also considering a home loan, but with a fixed interest rate. At least I will know the exact figure for monthly repayments.
A friend who works at a bank told me that this situation has also created way too many loan defaulters but banks outsource the collection of such loans to Collection Agencies that will take a small cut from successful monies resolved. Banks know that managing accounts receivables is a time-consuming process and it is better to allow professionals to do the job than waste valuable human resource on it.
Certainly, this is a very attractive rate for loan applicants either for an overdraft against Fixed Deposit or for a home loan where the interest rate per annum is BLR minus x%, a rate that differs from bank to bank. As mentioned in a previous post, CIMB Bank is offering me a rate of 3.55% per annum for OD against FD.
However, while this may spur loans, this will also create unnecessary loan takers who may think that they could service their loans at this low rate. I have to admit that I am also considering a home loan, but with a fixed interest rate. At least I will know the exact figure for monthly repayments.
A friend who works at a bank told me that this situation has also created way too many loan defaulters but banks outsource the collection of such loans to Collection Agencies that will take a small cut from successful monies resolved. Banks know that managing accounts receivables is a time-consuming process and it is better to allow professionals to do the job than waste valuable human resource on it.
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