Malaysian Property Base Lending Rates

The Malaysian Base Landing rate published in mid 2010 revealed an average of 6.3% except for The Royal Bank of Scotland Berhad and Bank of Tokyo-Mitubishi UFJ (Malaysia) with 6.0% and the JP Morgan Chase Bank Berhad with 6.2%. Base lending rates (BLR) is a base interest rate and it is calculated by financial institutions with a formula that takes into account the institutions cost of funds and other administrative costs.

If we compare the BLR for the past few years, it seems that the BLR was quite high in 2006 with an average of 6.75% and dropped until it was only about 5.55% in 2009. The Royal Bank of Scotland Berhad had always adopted the lowest BLR, and all other banks lowest BLR is an average of 5.55%, the bank set it at 5.25%. It is one of the least popular banks in Malaysia, and there are only two branches in the country. One in Kuala Lumpur and another in Penang. In fact, most online applications and websites will not include this bank for the comparison of BLR, except for publications by the Bank Negara Malaysia.

The BLR rate has stayed pretty much the same over the years, but the highest BLR rate ever recorded in history was 12.27% in 1998. With bank interest rates dropping low, what comes to mind is probably the intent for refinancing. The general rule for refinancing is probably when the BLR is at least 1% lower than the rate that you had when you signed for your loan. You will also need to take into consideration other factors such as property value and your income.
Usually, refinancing makes sense if the owner intends to stay in the property for at least another three to five years. Refinancing helps, more so if the borrower is able to repay some of the amount in bulk during the switch of the refinancing so that the amount signed for refinancing is lower than what it should have been.

Malaysian banks restructured with some merges and deliberate ways to restructure, and the average 6.5% BLR is probably going to stay for a long time... until unless the property bubble bursts and banks need to revamp based on the economic condition. Will it be higher BLR to cover the escalating costs, or will it be lower BLR to encourage more lenders? Or will it be another restructuring?