Base Rate vs Base Lending Rate (BLR) 2015


Bank Negara Malaysia announces today that effective 2 Jan 2015, the Base Rate will replace the Base Lending Rate (BLR) as the main reference rate for new retail floating rate loans.

Base Rate is much more transparent for customers & banks are not allowed to lend below the base rate (except for cases specified by Bank Negara Malaysia, BNM). 

Base Rate is to be reviewed by the respective banks at least on quarterly basis & the same is to be disclosed publicly.

The calculations of Base Lending Rate (BLR) was mostly not transparent & banks were frequently lending below the BLR to their prime borrowers & also under pressure due to various reasons.

 Base Rate (BR) Base Lending Rate (BLR) 
 Jan 2, 2015 Used since 1983 
 More transparent Lacks of transparency 
 Rate based on borrower credit risk Substantial discount to the current BLR to attract customers and boost loan growth. 
Market driven & efficient pricing practices for retail loans
 Bank determined the rates and inefficient pricing on retail loans 
 Determined by financial institutions’ benchmark cost of funds and the Statutory Reserve Requirement (SRR) Calculated by financial institutions by takes into account the institutions cost of funds and other administrative costs 

For illustration purpose:

Property Value RM500,000

Loan Amount 90%: RM450,000 (No Lock-In Period)

Loan Tenure: 30 years


 Before 2 Jan 2015

 From 2 Jan 2015

 Reference Rate BLR = 6.85% BR = 3.2%
 Interest Rate BLR - 2.4% BR + 1.00%
 Effective Lending Rate 4.4% 4.2%
 Monthly instalment (RM) RM2,266.73 RM2,200.58

Note: Effective Lending Rate may vary if BLR or BR changes.

The Base Rate will be used for the new retail floating loans and the refinancing of existing loans extended from Jan 2, 2015.

After the effective date, BLR based loans prior to 2015 will continue to be referenced against the BLR. Also, when any bank makes an adjustment to the Base Rate, a corresponding adjustment to the BLR will also be made.

Currently, the BLR is 6.85%* while the prevailing mortgage rates hover between 4.20% and 4.90%.

The BLR is almost always the same amongst major banks.

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Julian Ong
Senior Team Leader / Negotiator / Motivator
REN: 7228
(+60) 16-6755577