3 MIN READWhat is Overnight Policy Rate (OPR) and how it affects the property market?

What is the Overnight Policy Rate (OPR)?

Bank Negara Malaysia (BNM) has reduced the Overnight Policy Rate (OPR) by 50 basis points (bps) to 2% on May 5, 2020, the lowest seen in the last 10 years.

This is the third time that Bank Negara Malaysia has announced to lower the OPR for this year. Back on March 3, 2020, Bank Negara Malaysia announced that the overnight policy rate would be reduced by from 2.75% basis points to 2.50%. And earlier this year on January 22, 2020, Bank Negara Malaysia stated that the overnight policy rate would be reduced from 3% to 2.75%. 

Through this, it is expected to bring a lot of positive effect on the Malaysian economy, included the BLR and Malaysian Ringgit exchange rate.


Lowering the OPR will boost the economy overall

First of all, why did Bank Negara Malaysia decided to lower the OPR? It might be due to boosting the economy because when the OPR is lowered, the interest rate of any savings will also be lower too.

Through such development, people will be more willing to withdraw money from Fixed Deposits and focusing on investments.

Naturally, the first choice of investment would be property due to the stability of it. If you are considering to invest in the property market, you might be interested to read more about “Top 3 places to invest in Kuala Lumpur for 2020“.

If you do not have any plans on buying a house, you should probably start a plan.

Why do you ask?

Because by lowering the OPR, the action will impact the house loan interest too.

For homebuyers, the house loan’s interest is quite a high proportion to the loan. Yet, once the OPR is lowered, the bank will also lower the interest rate and immediately inform the buyer about the new rate and monthly payment amounts.

If you are a house buyer and did not receive any notices within the first three or four months, you might need to check in with the bank.

In layman terms, by lowering OPR it allows homebuyers more savings than their house loan’s interest.


The opportunities for investors

Currently, the property overview in Malaysia heading towards the direction of where supply is more than the demand. For an investor, you can grab the chance to invest at the moment and once the momentum of demand is higher than the supply, you can earn twice than the usual.

In conclusion, the decision to lower the Overnight Policy Rate is to encourage every Malaysian to spend or invest through any bank of their choosing –  allowing the boost on the fund’s liquidity and to assist the growth of the economy.

Interested to invest in a property in the capital city but can’t make up your mind on where to invest? Leave your contact details, and our agents will contact you as soon as possible and provide a free consultation.

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