Hike in monthly car, housing loan after hike in overnight policy rate

SHAH ALAM – Some borrowers have received bank notices over a hike in monthly loan payments.

Mohamad Azrul Ala Zulkafli said he received the notice of adjustment in the base rate for motor finance on May 18.

His car's monthly payment has gone up from 2.50 percent to 2.80 percent.

"My monthly instalment of RM430 will go up to RM500 from July 1," he told Sinar Harian.

Several other loan instalments have also increased, Azrul said.

"I am really burdened by the increase in loan repayments, coupled with the increase in the cost of living," he added.

In May of last year, Bank Negara Malaysia increased the overnight policy rate (OPR) from 1.75 percent to 2 percent or by 25 basis points. The central bank is expected to increase the OPR by another 25 basis points to 2.25 percent.

Mohd Saiful Baharom Shah, a teacher said his car instalment will increase to about RM20 per month.

“If it was formerly RM710, now it will be RM730 monthly,” he said.

Saiful hopes the bank would not hike the loans of the lower-income group.

According to 51-year-old Jaspal Singh, a former journalist said he received a bank notice on May 27, with an increase in base loan rate. He will be paying an additional RM193 monthly for his home to RM1,077 monthly.

The additional payment amounts to RM2,328 a year," the Ipoh man said.

Another borrower, teacher Helmi Shafee, 30, said she was taken aback by the change in the new car instalment rate.

He pays about RM440.

“I still haven't gotten a letter from the bank, so I'm not sure how big the increase will be,” he said, adding that the increasing cost of living was worrisome.