Recently OCBC Bank Bhd launched a new home loan package called Ideal Mortgage. Ideal Mortgage is a credit facility that does not use the Base Lending Rate(BLR) as a benchmark. It uses it’s own Mortgage Lending Rate (MLR) instead, which is developed exclusively for home loans and is calculated based on the mortgage business whereas BLR takes into consideration the overall bank costs.
MLR is currently set at 4.70%, while BLR is currently 5.55%.
Benefits of Ideal Mortgage:
- 2.5% fixed rate for first year, there after MLR -1.30 = 3.4%
- Short lock-in period – 3 years
- Low exit cost – Early settlement penalty is 2% of the approved loan amount or minimum RM 5K, whichever is higher
- Suitable for investor who aimed to sell the property earlier and maximum profit.
Drawback:
- Higher interest rate compare to others loan package. OCBC have a package which can offer up to BLR – 2.4 whole tenure, which is equivalent to 3.15 % (Loan amount > 300k, 5 years lock in, 3% early settlement penalty)
- The benchmark rate MLR still very new in market and it solely controlled by OCBC bank. No history records to proof the volatility of MLR against BLR. Major concern for most people.
- More suitable to investor and not for house owner as it cost higher.
- NZEC package (Non Zero Entry Cost)
More details of the Ideal Mortgage package:
|
|
The idea of the package is great, which offer lower penalty and shorter lock-in period compare to standard package which imposed 5 years lock in period and 3% penalty.
If you are investor and buying property for investment, there’s one alternative to avoid penalty. Stay tune and I will share with you if the response to this post is great. 
i dont think MLR can lasting in market since the rate only suitable for investor. and i feel not comfortable about rate just control by OCBC own, if anything happen on OCBC, MLR will go up ???really unsecure….
compare to KLIBOR,i ll prefer it.
Hi Racheal,
I do have same opinion. MLR calculation is a myth and it solely controlled by OCBC, in my opinion.
When comparing between KLIBOR and BLR, I will more prefer the BLR based package. You can check the comparison here.
http://moneysospecial.com/mortgage-loan/blr-vs-klibor/
I honestly think there isnt a single valid point for customers to subscribe to OCBC’s MLR (unlike your post) when there is no basis for tabulation of the MLR.
If MLR is pegged to the mortgage business, what changes in the OCBC mortgage business will cause an upward/downward change? Would it change downward if the mortgage business becomes overtly profitable? If that is so, do you honestly think the bank will reduce their profits? There were no statements given in any of the press reports.
Now on the other extreme, would OCBC increase the MLR when the mortgage business becomes less profitable? Could OCBC use this as the ace in it’s sleave to increase profits whenever it is necessary? Does BNM govern the MLR movement? There are also no statements given in any of the press reports.
Mortgages are almost always a huge sum. As an investor we need the ability to trust the reference rate. This is where KLIBOR is the better ‘bet’.
In my opinion, there’s few advantage of this package comparing to others, which the most attractive is 3 years lock in period. With 3 years lock in, the lock-in period almost end when the property completed (2 years for landed and 3 years for condo/apartment).
Investor can straight away sell the property that time without any penalty.
I believe OCBC will not spoil their own reputation by simply increase the MLR for more profit. The rates must be on par with the market rates and attractive enough for potential customer. Of course, the rates definitely will be higher because of short lock in and lower penalty. Consumer always have to give and takes in this case.
Why do you think KLIBOR is better bet? Is it better than BLR based loan? From my analysis, the BLR based package should be more attractive, in terms of rates.
If one scare of MLR will increase, don’t you think BLR the same? MLR index increase and decrease will go through BNM approval. Don’t forget that everything happening in the banks in Malaysia rule by BNM. Like KENSON said, with 3 years bonding period, after an under construction property finish job, your bonding period will end soon. It is because the bonding period start from the 1st release of loan. Like any other bank, you hardly can find a loan’s bonding period starting from 1st release. You just imagine, 5 years bonding period for under-con condo which will take approx 3 years to complete. Total of 8 years!! Early exit fee for OCBC Ideal Mortgage is only 2% of loan amount, lower compare to standard rate 3%.