Banks to cut loan repayments

[honeylee 0]

Read this in The Star today. It say they will cut the monthly repayment amount but keep the repayment period. Does that mean they reduce the interest rate?

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PETALING JAYA: Banks will reduce loan instalment payments, an exercise that will be completed by the first quarter of this year, the Association of Banks said.

Cus­tomers who prefer to retain their repayment amounts need to get in touch with their banks, it said in a statement.

The association said that the move by all commercial banks to cut instalment amounts follows the request by the Government to help borrowers facing difficult economic times.

“Lower monthly loan repayments will allow for more disposable income to be in the hands of the public and we reaffirm our member banks’ commitment to continue to be reasonable as well as responsive to the public’s needs,” it said in a statement yesterday.

The association said the move to reduce repayments was now possible following Bank Negara’s announcement of the reduction in the Overnight Policy Rate on Tuesday.

That move would bring about the reduction in the base lending rates of banks.

With the reduction, the association said all commercial banks had agreed to cut loan repayment amounts across the board and maintain the original repayment period.

However, it said borrowers also had the option of maintaining their monthly instalment amounts and have a shorter repayment period.

The association said borrowers could consult their banks’ hotlines if they have queries on the proposed revision and other facilities.

The hotlines are published at the association’s website www.abm.org.my.

Customers can also call the association’s toll-free service ABMConnect at 1-300-88-9980.

http://thestar.com.my/news/story.asp?file=...&sec=nation

[bunnyNwife 0]

Bank Negara has announced a 0.5% cut in lending rate and all banks should be reducing their BLR by 0.4% (from 5.95% to 5.45%) by early Mar. Our loan installment was fixed when we obtained our loan and that time BLR was much higher like 6.95% or so. If we continue paying the same installment under the lower interest rate environment (5.45% vs 6.95%), we should be able to repay the house at a shorter timeframe as we will paying lesser interest and more toward reducing the loan principal.

In view of this, the association is telling the bank to re-calculate the installment amount based on the latest BLR and the remaining tenure of our loan. The revised installment will definitely be lower than the current installment that we are paying. We can then pay lesser installment and have more money leave behind for other usage.

[erinepink 0]

meaning this will not apply to hire purchase and credit cards lo... right?

[bunnyNwife 0]

Nope. Hire purchase is fixed interest and worse till not reducing balance as they have fix the total repayment amount upfront. For credit card, they have just reduced the late payment charges from 2% to 1% and dunno what else BUT damn minimum la.

I believe FD rate will also be further reduced by 0.4% ie from 2.5% to 2.1%. For those who have excess cash keeping under FD, you may want to consider putting it into your flexi housing loan account so that you can save on the interest and your installment amount till be used to pay down your principal much faster. Under flexi scheme, you can always withdraw the money out again later on when you need to use it or when the FD rate goes up again.

[aishiteru 0]

maybank already announced that they going to reduced the BLR rates from 5.95% to 5.55% starting march..

i'm sure of other banks

[Pink Kitty 0]

Nope. Hire purchase is fixed interest and worse till not reducing balance as they have fix the total repayment amount upfront. For credit card, they have just reduced the late payment charges from 2% to 1% and dunno what else BUT damn minimum la.

I believe FD rate will also be further reduced by 0.4% ie from 2.5% to 2.1%. For those who have excess cash keeping under FD, you may want to consider putting it into your flexi housing loan account so that you can save on the interest and your installment amount till be used to pay down your principal much faster. Under flexi scheme, you can always withdraw the money out again later on when you need to use it or when the FD rate goes up again.

Yea, with the OPR's further reduction, FD rate is now 1.5% to 2% (depending on the duration), very pathetic, might as well don't save and use the money to reduce the housing loan interest charges...but on the other hand, we need cash for the rainny days... cuz not every banks have that flexi scheme.

[honeylee 0]

why dun u try asking other bank for flexi scheme and if there are extra charges to refinance. you really save a lot by keeping ur savings in the loan account rather than FD. You can withdraw the money whenever u want.

Yea, with the OPR's further reduction, FD rate is now 1.5% to 2% (depending on the duration), very pathetic, might as well don't save and use the money to reduce the housing loan interest charges...but on the other hand, we need cash for the rainny days... cuz not every banks have that flexi scheme.

[juvannise 0]

i'm stupid is this...

is this means if i still maintain the same amount for my house loan repayment, i manage to finish paying faster eg. should pay RM300/mth for 20 years, so if i still pay Rm300/mth, may end up paying only for 18 years?!?!

hire purchase means for car right? so no changes lo?!?

[eeyiooh 0]

Bank Negara has announced a 0.5% cut in lending rate and all banks should be reducing their BLR by 0.4% (from 5.95% to 5.45%) by early Mar. Our loan installment was fixed when we obtained our loan and that time BLR was much higher like 6.95% or so. If we continue paying the same installment under the lower interest rate environment (5.45% vs 6.95%), we should be able to repay the house at a shorter timeframe as we will paying lesser interest and more toward reducing the loan principal.

In view of this, the association is telling the bank to re-calculate the installment amount based on the latest BLR and the remaining tenure of our loan. The revised installment will definitely be lower than the current installment that we are paying. We can then pay lesser installment and have more money leave behind for other usage.

Hai bunnyNwife

i will suggest u do a refinance, i also just doing mine refinance because i also same case with u, starting i is loan from Bank A is interest rate BLR+2% and now i refinance form Bank B is BLR-1.2%, so i really can save more. and i also have penatly from Bank A due to less than 5 year doing refinance. But we count it also worth it.

[bunnyNwife 0]

Hi eeyiooh..

Actually dun need to refinance..my loan package was BLR + 0.25%... and I wrote to the BANK and threatened them that I wanna refinance my house with few other banks which give me better rate. They immediately dropped the interest to BLR - 1.8% which give me more than 2% interest saving and coupled with the recent BLR cut from 6.95% to 5.55%, effectively I am saving 3.45% p.a. of interest !! Huuraayyy...

Refinancing can be quite tedious and some of us might still be trapped in the lock-in period where refinancing is not allowed or will attract 2%-3% penalty. So, if your bank willing to drop the interest, then that's the best and usually they will give in especially your saving from refinancing is greater than the 2%-3% penalty as they rather earn slightly less from you than losing you as their customer.

[aishiteru 0]

my old housing loan is BLR + 0.44%

i did write in and they told me the most they can offer is BLR - 1.3%

then i refinance from other bank with BLR-1.8% flexi loan...

bunnynwife,

wow urs really good deal...plus u save $$$ on the penalty !!

[bunnyNwife 0]

I actually provided the bank with offers from other banks with rates such as BLR - 1.8% / 2%. They knew I am serious and I have offers on hand liao.. somemore 2 banks. So, they quickly dropped the rate. Hahaha... At time, we just need to be a little bitchy with those banks!!!

[eeyiooh 0]

Hi eeyiooh..

Actually dun need to refinance..my loan package was BLR + 0.25%... and I wrote to the BANK and threatened them that I wanna refinance my house with few other banks which give me better rate. They immediately dropped the interest to BLR - 1.8% which give me more than 2% interest saving and coupled with the recent BLR cut from 6.95% to 5.55%, effectively I am saving 3.45% p.a. of interest !! Huuraayyy...

Refinancing can be quite tedious and some of us might still be trapped in the lock-in period where refinancing is not allowed or will attract 2%-3% penalty. So, if your bank willing to drop the interest, then that's the best and usually they will give in especially your saving from refinancing is greater than the 2%-3% penalty as they rather earn slightly less from you than losing you as their customer.

Ya i have write to them to request reduce mine loan interest, but their no accept lor, so i was very angry, and just do refinance from other Bank lor. Maybe i not so good to them lor. and not must money in saving account. Maybe mine balance form them not so much, only 80K

[daddyo 0]

The banks' move to reduce the monthly installments and maintain the repayment period on the surface seems like a good move for consumers but in essence this move serves only to benefit the banks.

In keeping the repayment period, the banks stand to earn more in interest. If we maintain the installments, we could pay off the loan in a much earlier time frame and save a LOT from interest.

Even if they reduce the installments, most you get is about a couple of hundred bucks reduced every month. What's a couple of hundred bucks compared to upwards of RM10k savings in interest if you repay earlier?

Did you know that after the seventh year, most banks have already re-couped the initial amount they loaned you and the rest is pure interest alone?

Did you know that if you pay double installments every month, you could repay your whole loan amount in less than 10 years if you are on a 20 year tenure?

That's why banks never, ever welcome customers who want to repay earlier. It cuts off their interest earnings! The longer you stay with them, the more they can earn. That's why you will find a lot of obstacles in place if you want to repay early. Try calling your bank and ask them what you need to do if you want to settle your loan now. See what they tell you. If you have not reached your 4th year, I don't think that they even allow you to settle without some penalty of some sort. Think about it... you repay early, they want to charge you for it. If you lend people money, don't you want them to repay you early? Not if you calculate interest the way the banks do!

The OPR drops and they find that most loans can now be repaid much earlier and they come up with some excuse to let you stay the whole duration. That's why you need to always read the fine prints when it comes to banks. They have perfected the ultimate blood sucking system!

[staycool 0]

Hi eeyiooh,

Im in the same situation as you. My current hse loan bank was not willing to reduce more on the BLR and modified our current packages. Furthermore, the packages that we had now seem like a bit stupid (dunno how to explain and due to this is our 1st hse, we are quite blur previously on the hse loan thingy) and their officer is very rude to us so we decided to do the refinancing. Im now in the midst of doing it as well and some bank had offer us flexi loan -BLR 2%/ 1.8%. Even though we got to pay sum penalty but after calculation, we still find it is worth it & save quite a lot too.

hi bunnyNwife,

Ur bank is so good..and u can save on the penalty charges as well...

[auntie111 0]

Hi eeyiooh..

Actually dun need to refinance..my loan package was BLR + 0.25%... and I wrote to the BANK and threatened them that I wanna refinance my house with few other banks which give me better rate. They immediately dropped the interest to BLR - 1.8% which give me more than 2% interest saving and coupled with the recent BLR cut from 6.95% to 5.55%, effectively I am saving 3.45% p.a. of interest !! Huuraayyy...

Refinancing can be quite tedious and some of us might still be trapped in the lock-in period where refinancing is not allowed or will attract 2%-3% penalty. So, if your bank willing to drop the interest, then that's the best and usually they will give in especially your saving from refinancing is greater than the 2%-3% penalty as they rather earn slightly less from you than losing you as their customer.

Hi,

That's a really great saving.. Do you mind saying which bank you are getting the loan from? I'm also writing in to my bank to revise my housing loan rates. But haven't gotten a reply from them yet.

Trying to see if other banks can make better offer.

Thanks.

[bunnyNwife 0]

My housing loan is with Public Bank. If you want a strong case, you should get hold of offer letters from other bank & attached to your letter to them. Sometime the bank thinks that you are just plain asking. If there is a ready offer, they will be very nice to you worrying that they will lose you as their customer especially you have been prompt in making your payment. Oh ya.. bear in mind that your bank will definitely lock you for another 5 years if they agree to reduce your interest rate - which is indifferent to you as the new bank will be asking the same.

Staycool, go ahead and get an offer from another bank. Before you proceed with the refinancing, make sure you speak to your bank again & show them your offer letter. Either they give you a lower my interest rate OR you will refinance with another bank. Are you taking the fixed rate loan i.e. 5.5% for 30 years ? If so, then it might be a little tricky.. but I am sure they still can do something about it.

Bankers can be very sticky and try their very best to keep their rate. BUT once you have better offer on hand, they will start to drop the rate.

[agyy 0]

wah bunnyNwife, u so lucky, ur bank willing to reduce the interest rate. But just wondering, when they reduce the interest rate, did they lock u for another 5 years?

[bunnyNwife 0]

Yes.. another 5 years.

As I mentioned earlier, the bank will always lock us up for another 5 years after giving us a cut BUT it's indifference to us as we will be locked by the new bank too if we ever refinance with them.

[yvonne078 0]

thanks girls for sharing this topic here.

Now only i reliase how much extra i'm paying to the bank.

Actually, when i first purchase my house 5 years ago, i took the fixed rate plan.. safe mah .. scare the BLR rate go up.. now i felt so stupid the rate has been going down from 10.5% to 6.00 % ( 1998 - 2008 )

i called up my bank today and after calculation i already extra pay interest 18K to the bank !!!

my bank current offer me to refinance

1st year 3.88%

2nd years onward BLR - 1.7%

is this a good deal ?? or is there any lower rate ?

[bunnyNwife 0]

Do you mean your current bank is offering you the above-mentioned package w/o you having to incur any penalty or refinancing cost? How much is your loan amount? If it's around RM100k-200k, the rate is quite reasonable. Banks will tends to give better rate for bigger loan amount like those about RM500k or RM1mil.

If you go to another bank, they might be able to give your BLR-1.8% or BLR-1.9% if you push hard enough BUT you will need to go thru the whole documentation and refinancing process which can be quite time consuming. Also they will definitely revalue your house again and should your house valuation dropped liao (most likely it might be lower than b4 due to the bad market condition), they will give you a smaller loan amount (80%-90% of current house value) which might/might not be sufficient to cover your existing loan.

[yvonne078 0]

the officer in charge didnt mentioned any thing on penalty. Will ask her tomorrow

But she told me that the new refinancing plan come with free legal fee.

I still try to query from others bank for better offer...

Yet to get reply..

[bunnyNwife 0]

If your loan is over 5 years, shld not be any penalty even if you refinance with another bank. Since it's free legal fee, worth considering it. Shld other banks give you better rate, you may either refinance else where or ask your bank to match/give a better rate. No harm trying... it's all about saving our hard earned money...

[staycool 0]

My housing loan is with Public Bank. If you want a strong case, you should get hold of offer letters from other bank & attached to your letter to them. Sometime the bank thinks that you are just plain asking. If there is a ready offer, they will be very nice to you worrying that they will lose you as their customer especially you have been prompt in making your payment. Oh ya.. bear in mind that your bank will definitely lock you for another 5 years if they agree to reduce your interest rate - which is indifferent to you as the new bank will be asking the same.

Staycool, go ahead and get an offer from another bank. Before you proceed with the refinancing, make sure you speak to your bank again & show them your offer letter. Either they give you a lower my interest rate OR you will refinance with another bank. Are you taking the fixed rate loan i.e. 5.5% for 30 years ? If so, then it might be a little tricky.. but I am sure they still can do something about it.

Bankers can be very sticky and try their very best to keep their rate. BUT once you have better offer on hand, they will start to drop the rate.

Hi bunnyNwife,

Nope, my current bank loan is not the fixed rate plan, we are engaging those 3 tier home loan (-BLR). We thought that our monthly payment will be fluctuate with the Bank Negara BLR but it is not. Now when thinking back, I really feel we are so stupid last time as the mortgage officer also explain in the same way till when we start our monthly payment, we only realize that we had to pay fix amount monthly and those -BLR thingy will be only calculate at the end of our loan tenure. My hubby did call them up checking with them if in this case, who is gonna to keep and eye on how many BLR on each year and how is the calculation. And guess what, the officer answer us "You sendiri keep track lar!!, You punya house loan mah, sendiri jaga lar!!"

30 years later, we dunno what will happen, and nobody will have the proof that what BLR on each yr for the past 30 years. The -BLR package offered to us seem like not beneficiary to us where I see the rest is enjoying reduction of monthly house loan payment. Again, we are unsatisfied with the offer of -BLR as most of the bank can now offer till -BLR2.0/1.8, my hubby call up checking with them on the posibility to modified the package, the officer straight away answer "NO WAY!!" They not even explain to us on what we can do, write in or what so ever and the worst is sounds so rude, like we are owing the officer thousand millions. Seem like we are not their value customer.

We really feel fed up, and now in the midst of doing re-financing. Other bank had offer much more better rate to us. Now, waiting for the offer letter to be out. Even with penalty, we can save a lot..the amount to be save is huge...

[auntie111 0]

My housing loan is with Public Bank. If you want a strong case, you should get hold of offer letters from other bank & attached to your letter to them. Sometime the bank thinks that you are just plain asking. If there is a ready offer, they will be very nice to you worrying that they will lose you as their customer especially you have been prompt in making your payment. Oh ya.. bear in mind that your bank will definitely lock you for another 5 years if they agree to reduce your interest rate - which is indifferent to you as the new bank will be asking the same.

Staycool, go ahead and get an offer from another bank. Before you proceed with the refinancing, make sure you speak to your bank again & show them your offer letter. Either they give you a lower my interest rate OR you will refinance with another bank. Are you taking the fixed rate loan i.e. 5.5% for 30 years ? If so, then it might be a little tricky.. but I am sure they still can do something about it.

Bankers can be very sticky and try their very best to keep their rate. BUT once you have better offer on hand, they will start to drop the rate.

Hi BunnyNwife,

Thanks for the great tip! Hopefully my bank will offer me a competitive rate, if not, will take your advice in getting offers from other bank.