Bank Negara Malaysia’s OPR decision. Up, Down or Stay the same? OPR stands for Overnight Policy Rate. This guides the interest rates for all banks in Malaysia.
What happens when the interest rates go up?
Depositors will be happy. Their deposits in the bank will now get higher returns. They (including me) have been getting low returns as the OPR was just 1.75%. I remember long time ago when Fixed Deposit rates were even above 5%! Maybe higher, can’t remember if I was too young to know. However 5%, I am quite sure of it.
Property owners will be unhappy. Their monthly mortgage repayment will also be adjusted higher. As they cannot suddenly increase rental to cover for it, it means they will have to pay more by themselves. Potential property buyers would also be unhappy. Suddenly the chance for their loan application to be approved has gone down a little too.
What happens when the interest rates go down?
Depositors will be unhappy. This is especially to the ones who rely on their savings for interest. They will have lower returns and could even mean cutting a meal or two every other day because of this. With FD rate of just 1.8% for example, it meant that even a RM100,000 FD will only receive a paltry RM1,800 after 365 days! That’s just RM150 per month or around RM5 per day. Seriously, it’s seriously low.
Property owners will be happy. They could pay less for their home. That little savings every month could mean an extra meal or trip to the cafe too. Potential property buyers will also be happy because they could now afford a slightly higher priced property for the same instalment. In fact if they opted for the same property price, their chance of getting the loan approved will be higher too.
Okay, so what happened to the OPR?
Bank Negara Malaysia (BNM) has announced that the rates will remain unchanged. Actual statement, “At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 1.75 percent.”
Here’s their full article (Bank Negara Malaysia) for everyone’s reading yeah. Click here.
I am just happy with whatever Bank Negara Malaysia made because if they decided to keep it, it also meant that the economy is recovering and may not need the extra push from a lower rate. If they increased it, it also meant that the economy has started the recover and BNM may want to keep away speculative activities instead. I am grateful that the economists in BNM is crunching numbers to come up with this decision. Thank you.
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