AIA HOME LOAN UPDATES MAY 2011‏

It is happening again! Interest rates are on the rise once more!

May 5, 2011- Bank Negara Malaysia increased the Overnight Policy Rate (OPR) by 25 bps (0.25%) and Statutory reserve requirement (SRR) by another 100 bps (1%).
 
May 11, 2011 -Maybank and RHB Bank became the first banks to raise their base lending rate (BLR) from 6.30% to 6.60% as others follow suit.

Effects of OPR & SRR hikes - passed to borrowers with Higher BLR hike!

The higher BLR increase by 30 bps (instead of 25bps) is to incorporate the higher rise in SRR. An increased in SRR raises the cost of funds for banks and a 1% increase is expected to absorb approx RM7.5 billion liquidity from the market. Unfortunately, these additional costs are just passed back to the borrowers with higher BLR hikes with no impact on the banks!!

The worst may not be over
For this year alone, economists expect 50 -75 basis point rise in OPR and 300 basis point increase in SRR. This will mean further rounds of BLR hikes…..  

The bad news is…. the increase in BLR may even be higher than the rise in OPR if SRR is raised!  
 
Can you really afford another round of rate hikes?

OPR increases in 2010                        BLR: 5.55% (in 2009)
0.25% hike in March to 2.25%                 BLR: 5.80%
0.25% hike in May to 2.50%                  BLR: 6.05%
0.25% hike in July to 2.75%            BLR: 6.30%    

TOTAL BLR INCREASES in 2010: 0.75%

OPR & SRR increases in 2011

0.25% hike in May to 3.00%                   BLR: 6.60%        
TOTAL BLR INCREASES : 1.05% to date

0.25% hike in July?!                         BLR: 6.85%?
0.25% hike in September?!                    BLR: 7.10%?

OPR increases in 2012 onwards?
 
IMPORTANT TO NOTE :

If you have a RM500,000 loan at BLR-2.20% an increase in BLR from 5.55% to 7.10% for a RM500,000 loan for 30years will:-
= Increase instalment by RM450/- per month  
= Increase your total interests by RM162,000/- for the whole term.
= Increase the loan tenure from 30 years to 53 years and 5 months (increase tenure by 281 months ie an additional RM619,324/-    (if instalment remains unchanged)

 THE SOLUTION:
 AIA HOME LOAN – THE LOWEST LONG TERM FIXED RATE IN MALAYSIA

4.85% p.a. fixed up to 30 years

5.25% p.a. fixed with Zero Moving Cost (Free valuation, legal fees, stamp duty on loan)

This is strictly for a limited time period only so get in your applications asap.
The packages are applicable for both purchase of properties and refinancing of existing loans.