KLIBOR pegged Housing Loan

Most of us heard of BLR (Based Lending Rate) and the recently introduced Base Rate (BR) in relation to housing loan. Effectively early this month, all commercial banks that packaged housing loan based on BLR would need to charge their news loan customer based on BR which is more transparent and market driven.

While reading through some articles about Interest Rate, I came across Kuala Lumpur Interbank Offered Rate (KLIBOR), which is the average interest rate at which term deposits are offered between prime banks in the Malaysian wholesale money market or interbank market. Interestingly, a few banks such as Standard Chartered Bank, and Hong Leong Bank do offer housing loan package based on KLIBOR.

According to sources in SCB and HLB, the KLIBOR housing loan is pegged to the 3-month KLIBOR, which has consistently been lower than the Base Lending Rate (BLR), hence an effective lower interest rate. The first 3-Month KLIBOR is fixed on the business day immediately before the first loan disbursement date. The next 3 months interest rate is sets by adopting the 3-month KLIBOR rate which is fixed on the last business day of the 3 months period.

This interest rate is updated every 3 months. For example the 3-month KLIBOR rate on 30 January 2014 would the rate effective from 4 February 2014 till 3 May 2014 and the 3-month KLIBOR rate on 2 May 2014 would the rate effective from 4 May 2014 till 3 August 2014. 

More information about Hong Leong KLIBOR housing loan: https://www.hlb.com.my/main/personal/loans/klibor-housing-loan

SCB KLIBOR housing loan: https://www.sc.com/my/borrow/mortgages-mortgageklibor.html

I am not sure if there is any catch with these products, but from the website, it seems to be able to help saving heaps from the interest one ended up paying compared to BLR based rate. If you know about anything about these loans, leave me a comments at the end of this post.

1 Comment

  1. malaysia property investor forum

    Highly energetic post, I enjoyed that a lot. Will there
    be a part 2?

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