Ending flat-rate loan calculations can curb household debt, bankruptcy risks

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KUALA LUMPUR: Bank Negara Malaysia’s (BNM) proposal to abolish the flat-rate method for calculating personal financing is seen as a significant step towards improving the financial health of households, said an economist.

BNM’s Exposure Draft on Personal Financing reveals that as at end-2023, aggregate household debt stood at RM1.53 trillion, with 12.6 per cent attributed to personal financing.

AmBank Group chief economist Firdaos Rosli explained that the flat rate interest, combined with the Rule of 78, often results in borrowers paying higher interest upfront, disproportionately impacting those who repay early.

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Article Details

Category: EconomyBusiness

Markets: MalaysiaAustraliaSingapore

Topics: Household Debt Amina Kayani /Business/Business News BNM Interest Rates Firdaos Rosli Banking Bank Negara ABM Bankruptcy Mohd Afzanizam

Source Website Secure: Yes (HTTPS)

News Sentiment: Negative

Fact Checked: Legitimate

Article Type: News Report

Published On: 2024-12-24 @ 13:05:00 (1 days ago)

News Timezone: GMT +8:00

News Source URL: thestar.com.my

Language: English

Article Length: 894 words

Reading Time: 5 minutes read

Sentences: 33 lines

Sentence Length: 28 words per sentence (average)

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Copyright Owner: © The Star

News ID: 24623450

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