For the first time since May 2011, Bank Negara Malaysia (BNM) has recently raised the overnight policy rate (OPR), the rate at which banks borrow from each other, by 25 basis points - effectively raising it to 3.25%.
BSM has stated that this increase is expected, to ensure stable economic growth and to offset the threat of inflation, which is expected to average between 3%-4% this year.
Banks will surely benefit in the short run with loans pegged to the Base Lending Rate (BLR) already adjusted to allow banks to earn high profit margins.
This sentiment is echoed by CIMB Research, who said that loan approvals might decline with higher interest rates, but added that the impact to the average Malaysian might not be big as the magnitude of the rate hike is less than a percentage point.
What Does This Mean For You?
As alluded to above, for those thinking of taking up a loan with variable interest rates such as a housing loan, you will have to pay more on your monthly instalments. And surely for those with weaker credit scores will have a harder time getting approved for a loan.
But is there a silver lining to all of this? Will savings and fixed deposit rates rise in tandem? What about those with existing loans with the banks?
These are exactly what the people at BFM's daily business program, Ringgit and Sense, wanted to know. And who better to ask then Hann Liew himself, CEO of RinggitPlus - Listen below!