PETALING JAYA: Refinancing loans is one way the public can soften the impact, provided the latest rate is lower compared to the initial one, says an economist.

       Dr Yeah Kim Leng of Sunway University said to save even more, the public could also opt for fixed rate loans offered by financial institutions.

       However, he said one should seek professional advice from loan officers at their respective banks while also “shop around for the best deals by the institutions”.

       “If the interest loan can be converted from variable rate to fixed rates, they can go for it. But, usually, it depends on the initial conditions (of the loan). Therefore, it is important to get assessment from the financial advisers and get their opinions whether the refinancing is beneficial or not,” Yeah said.

       “Borrowers should also have a strong repayment record to strengthen their credit standing and bargaining power to be offered better financing rates.”

       He said the rate readjustment at an “appropriate level” would be able to grow the economy without igniting inflation.

       “Rising interest rates will dampen consumption and investment, but if the level remains low and ‘accommodative’, the gradual increase will not hurt overall investment and consumer spending.

       “When the interest rate is at an appropriate level, the economy will continue to grow without overheating or igniting inflation,” he added.

       Bank Negara Malaysia raised its OPR by 25 basis points (bps) to 2.0% on Wednesday.

       Malaysia’s policy rate has been anchored at 1.75% since July 2020, having reached that historically low level after the central bank slashed it by 125 bps since the onset of the Covid-19 pandemic at the start of that year.

       Yeah explained that following the announcement, borrowers’ monthly repayment would edge up by 0.25%.

       “As an illustration for a 10-year loan, the increase in loan servicing ranges from RM12 a month for a loan amount of RM100,000 to RM60 for a RM500,000 loan.

       “In brief, borrowers will have to budget for a slightly higher debt servicing while savers will enjoy an equivalent rise in deposit rates.”