Base Rate (BR) to Standardised Base Rate (SBR)

Throughout my journey in financial service industry since 2012, I have gone through the change of Lending Rate reference from BLR to BR (year 2015) and now SBR. What’s new with this SBR? I will summarises into 3 key points.

BR to SBR starting 1 Aug 2022. Source: BNM Website

Key Point 1: Every bank will have same Base Rate = Standardised Base Rate (SBR)

Before 1 Aug 2022, every bank has different Base Rate + Spread. Therefore, it may be confusing to borrowers especially when doing comparison. After 1st August 2022, every bank will have same SBR which is BNM’s Overnight Policy Rate (OPR). Therefore, in future, everyone just need to know the updated OPR.

In short, when you apply for loan; When Bank A offers SBR + 0.3 and Bank B offers SBR + 0.2, you can safely choose Bank B for cheaper effective lending rate.

Key Point 2: What happen to my loan which is still using BLR or BR?

Whichever reference rate for your loan, it will move in tandem with OPR or SBR in future. If OPR increases or decreases by 0.25%, BLR and BR will also move up or down by 0.25%.

SBR, BR and BLR will move in tandem with the OPR.

Key Point 3: Who sets SBR?

Bank Negara Malaysia (BNM). Since SBR is equal to OPR and BNM sets OPR, therefore, SBR will be set by BNM (finally.. as BLR & BR were not set by BNM).

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