THE cut in Bank Negara’s intervention rate by 0.5%, which results in a lower base lending rate, as set out in the recent economic package is expected to spur the demand for properties and further intensify competition among banks to offer attractive housing loan packages.

Standard Chartered Bank Malaysia Bhd country head of consumer banking Bridget Lai said the housing loan industry had always been very competitive but with the ''goodies'' handed out, house buyers would now be more attracted to properties.

RHB Bank Bhd head of consumer banking Peter England said the rate cut would definitely help buyers by making housing loans more affordable and enable those with existing housing loans the opportunity to pay off their loans faster or reduce their instalments.

Lai and England was speaking to StarBiz in an interview in Kuala Lumpur.

England said the rate cut would not necessarily prompt any major changes in housing loan packages as most banks were already offering discounted rates for the first year and there was not much room for these to move lower.

Standard Chartered expects the demand for certain classes of properties to increase and competition to further stiffen in regard to housing loans.

Lai said the bank foresaw a jump in demand for properties priced below RM180,000 and correspondingly, banks would compete with one another for a slice of the action.

She said the bank did not foresee the current price war tapering off but in fact expected it to intensify.

''Banks will have to be creative to remain competitive. Depending on what one means by the word ‘attractive’ housing loan schemes, Standard Chartered foresees new products being introduced to supplement products currently available in the market.

''Consumers will always shop for the best deal in town, not just on low interest rates alone,'' she said.

Lai said the bank would continue to roll out attractive packages to offer customers ''real value for money'' deals. Since housing loan was a long- term commitment, the bank believed in developing the right product to match a consumer's financial capability, she added.

Standard Chartered now offers a variety of housing loan packages such as a 3-year fixed rate, 5-year fixed rate, variable term loan package and its top selling loan MortgageOne.

Lai said the bank had just launched a new campaign for MortgageOne, under which customers could own their property in half the time and at half the cost.

England said RHB Bank currently had no plans to roll out different packages as a result of the rate cuts but was reviewing the different options that it could offer to existing customers.

RHB Bank, he said, was the first in Malaysia to offer the choice of 1, 2 & 5-year fixed rate housing loans under its MY1 package.

Source: The Star