How the 2025 OPR Cut Will Affect Factory Loan Eligibility in Malaysia

How the 2025 OPR Cut Will Affect Factory Loan Eligibility in Malaysia

In 2025, Bank Negara Malaysia (BNM) has taken a bold step by lowering the Overnight Policy Rate (OPR) — a move that is already sending positive ripples across the industrial property sector.

For businesses and investors eyeing factory units or industrial land, this OPR cut could make the difference between “maybe later” and “let’s go now.”

But how exactly does this affect your loan eligibility? Let’s break it down.

What Is the OPR and Why Is It Important?

The OPR (Overnight Policy Rate) is the benchmark interest rate set by BNM that influences borrowing costs across the entire banking system.

• When OPR drops, interest rates on loans typically decrease.

• This makes it cheaper to borrow — whether you're buying a house, a car, or a semi-D factory.

Why This Matters for Factory Buyers

Buying an industrial property like a factory or warehouse is often heavily financed through bank loans, especially for:

• SMEs upgrading from rental units

• Corporates expanding into logistics or manufacturing

• Investors buying to lease out industrial spaces

A lower OPR directly impacts loan approval and repayment capacity, especially in these ways:

 1. Improved Debt Servicing Ratio (DSR)

Banks use your DSR to evaluate how much of your income goes to repaying debts.

With lower interest rates:

• Monthly loan instalments become more affordable

• Your DSR improves

• You're more likely to get loan approval

This is a huge advantage for SMEs with limited credit history or variable income.

 2. Higher Loan Eligibility Amount

With the same income, you can now qualify for a larger loan due to lower instalments.

Example:

• At 4.5% interest: RM1 mil loan = ~RM5,000/month

• At 3.5% interest (post-OPR cut): RM1 mil loan = ~RM4,500/month

That RM500/month difference can:

• Qualify you for a larger property

• Free up cash for renovation or working capital

 3. Better Terms for Refinancing or Expansion

If you already own a factory:

• This may be the best time to refinance your existing loan at a lower rate

• You can even leverage the savings to fund additional factory units or upgrade facilities

 4. Stronger Case for Business-Backed Loans

Some factory purchases are backed by:

• Company revenue

• Asset-based lending

• Government SME schemes (like SJPP or BNM’s SME Automation & Digitalisation Facility)

Lower interest rates give you:

• A stronger risk profile

• Better loan packages and potentially lower processing fees

 Final Thoughts: Make the OPR Drop Work for You

The 2025 OPR cut opens a strategic window for factory buyers — especially SMEs and industrial investors.

If you’ve been:

• Waiting for better financing conditions

• Struggling with DSR approval

• Planning to stop renting and own your factory

Now is the right time to revisit your financing strategy.

Want Help Securing the Right Industrial Property?

At Terra Group, we specialise in:

• Matching clients with affordable and bank-friendly industrial units

• Coordinating with banks to improve loan approval chances

• Guiding first-time industrial buyers through the entire purchase process

Contact us or explore new launch industrial units at www.terragroup.my

Contact us Call Kenneth 017-380 9993 Or WhatsApp our team directly for the latest availability