Factors Affect Home Loan Interest Rates

There are a number of factors that could influence the interest rate on your home loan. Some are external factors (e.g. the state of the economy) which are beyond your control, while others (e.g. your credit score) you may have some influence over.

Let's take a quick look at some of these factors:

• Base Lending Rate (BLR)

The BLR is a reference interest rate used by banks to decide how much to charge for various products they offer. It is a rate that takes into account banks' cost of operations, and is typically similar among the major banks.

In Malaysia, home loans are normally quoted as a percentage above or below the BLR. This means, if the BLR increases or decreases by a certain amount, the interest rates charged on floating rate home loans also increase or decrease by the same amount.

• Are You A Profitable Customer

Like all businesses, banks are profit-driven. If you have many products (e.g. current accounts, credit cards, car loans) from the same bank, chances are, you will receive a much better offer for your home loan from that same bank (vs other banks).

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