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Have Personal Loan Rates Increased in Malaysia?

Key Takeaways

  • Personal loan rates in Malaysia have recently increased, influenced by a rise in the Overnight Policy Rate (OPR).
  • This is due to a variety of factors, including low OPR during the COVID-19 pandemic, adjustments based on the country’s economic health and many more.

As you explore various personal loans in Malaysia to find the one that suits you best, you might wonder: Have personal loan rates increased over the years?

The short answer is yes. Continue reading to discover the factors that influence personal loan rates in Malaysia.

Our aim is to provide you with a clearer understanding to craft a more informed financial plan.

Have Personal Loan Rates Increased in Malaysia?

Yes, personal loan rates in Malaysia have recently increased. The OPR heavily influences loan rates, but how does it work? Here’s a simple explanation to help you understand:

1. Recent Increase in OPR

The OPR, serving as the benchmark interest rate in Malaysia, was increased by 25 basis points (bps), bringing it to 3.00%.

This adjustment in the OPR is significant because it usually leads to a domino effect on various lending rates, including the rates for personal loans.

2. Cascading Effect on Lending Rates

When the OPR is raised, it becomes more expensive for banks to borrow money.

Consequently, banks typically pass on this increased cost to consumers by raising interest rates on various types of loans, including personal loans.

Therefore, individuals seeking personal loans in Malaysia may now encounter higher interest rates than before the OPR hike.

Read More: Personal Loan Without CCRIS in Malaysia: How to Get One

Why Have Personal Loan Rates Increased in Malaysia?

It’s worth noting that the increase in OPR is also caused by several other factors. This includes:

1. Low OPR During COVID-19

In response to the economic inbalance caused by the COVID-19 pandemic, BNM reduced the interest rates to historically low levels, dropping from 3.00% to 1.75% in 2020.

This move aimed to stimulate economic activity by making borrowing cheaper and encouraging spending during a period marked by uncertainty and financial strain.

2. Timing and Economic Health

Interest rates also play a pivotal role in the overall health of an economy and must be adjusted in response to the current economic conditions.

When the economy begins to recover and shows signs of health, it becomes important to reassess the status of interest rates.

This is because keeping these rates excessively low for an extended period during a recovery phase can have unintended consequences, like an increase in spending and borrowing.

While this might seem beneficial in the short term, it can lead to an oversaturated market where the demand exceeds the supply, thereby fueling inflation.

3. Preventing High Inflation

To prevent high inflation, BNM often raises interest rates as the economy improves, preventing the economy from overheating and experiencing excessive inflation.

This is because high inflation can significantly erode purchasing power, leading to a cycle of rising prices and wages, which in turn can destabilise the economy.

4. Balancing Economic Growth

Lastly, BNM aims to balance economic growth with inflation control. To achieve this, adjusting interest rates is a key tool.

Lowering rates can stimulate growth in slow economic times, while raising them helps cool an overheating economy and prevent inflation. This approach ensures steady and sustainable economic growth.

Read More: Why You Shouldn’t Opt for Loan Sharks in Malaysia

Bluebricks’ Comprehensive Loan and Consultancy Services

For borrowers in Malaysia, this increase in personal loan rates means adapting to a new financial environment where loan costs may be higher, requiring careful consideration of their borrowing needs.

Bluebricks is a proficient bank loan and debt consolidation agency in Malaysia with the expertise to assist individuals in understanding and managing the financial aspects of securing a large loan.

We offer a range of services that cater to different needs, including:

Moreover, our consultancy services are tailored to your specific financial situation, considering factors like:

  • The specific loan amount you require.
  • The urgency with which the loan amount is needed.
  • Whether you or your parents own a property that has been held for over ten years.
  • Your income level.
  • Your CTOS score (such as your credit score and credit history).

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Wilson Wai Kit

Wilson Wai Kit

Senior Consultant

With extensive banking experience, notably as a mortgage sales officer at UOB Bank, Wilson leverages his understanding of loan applications and approvals to offer financial insights and support to empower individuals to make informed decisions regarding their financial futures.

Feel free to contact him for assistance with your financial needs!

Contact Wilson
Wilson Wai Kit

Wilson Wai Kit

Senior Consultant

With extensive banking experience, notably as a mortgage sales officer at UOB Bank, Wilson leverages his understanding of loan applications and approvals to offer financial insights and support to empower individuals to make informed decisions regarding their financial futures.

Feel free to contact him for assistance with your financial needs!

Contact Wilson

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About Bluebricks

BlueBricks Holding is one of the top ten leading loan agency companies in Malaysia in terms of loan approval rates. As a leading loan agency company, we have extensive knowledge and experience in mortgage, personal loans, and business loans, and this enables us to help our customers to get the deal that is best suitable to them.

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