OPR Cut Timely For Home Buyers And Developers
Business Today, 15 July 2025
By Kenneth Soh, Country Manager – Malaysia, PropertyGuru and iProperty
Bank Negara Malaysia’s recent move on 9 July 2025 to reduce the Overnight Policy Rate (OPR) by 25 basis points to 2.75% marks the central bank’s first rate adjustment since 2023. This pre-emptive action comes at a pivotal time aimed at safeguarding growth amid moderate inflation, lowers the cost of borrowing across the board, and sends a positive signal to the property sector.
For consumers and industry players alike, this rate cut presents meaningful opportunities not only to ease financial burdens, but to spur renewed momentum across a market that has shown steady recovery over the past year.
Notably, history supports this outlook. When Bank Negara last lowered the OPR by 25 basis points in May 2019, residential property transactions rose sharply. According to the National Property Information Centre (NAPIC), there was an 11.5% quarter-on-quarter increase from 47,727 units in Q2 to 53,227 units in Q3 2019, and a 6.6% increase year-on-year. This precedent suggests that policy shifts of this nature can have a real and positive impact on housing activity.
Incentive for First-Time Buyers
The most immediate impact of the OPR cut is felt by homeowners and buyers with variable-rate mortgages, who will now see a reduction in their monthly loan installments.
For instance, a terraced house in Kuala Lumpur priced at RM865,000, which was the median price for such properties in the capital as of Q1 2025 would incur monthly repayments of about RM3,627 under a typical mortgage rate of 3.8% for a 30-year loan with 90% financing. When banks revise mortgage rates in line with the OPR cut, monthly repayments could fall by around 3.03%, translating to long-term savings of approximately RM39,564 over the loan period, assuming rates remain stable.
This is particularly welcome news for first-time homebuyers, many of whom have cited high interest rates as a key barrier to homeownership. Our H2 2024 Consumer Sentiment Study found that 40% of first-timers struggle to save for a down payment, and many respondents identified high interest rates as a key obstacle.
The lower OPR directly alleviates this pressure, making home loans more accessible and repayments more manageable. Coupled with other measures, such as the Housing Credit Guarantee Scheme (SJKP), the rate cut may coax hesitant buyers back into the market. In effect, buyers who were on the fence due to steep mortgage costs may now see a realistic path to owning a home.
Upsizing and Refinancing Opportunities for Homeowners
The OPR cut also opens up strategic opportunities for existing homeowners, particularly those considering refinancing or upgrading. As lending rates adjust in tandem with the OPR, many households may find themselves eligible for better loan terms.
Whether it’s securing a lower monthly repayment through refinancing or increasing their loan eligibility to fund an upgrade, homeowners now have more financial flexibility to pursue their long-term property goals. This could benefit young families looking to move into larger homes, or those seeking to take advantage of more favourable rates while they last.
A Catalyst for Developers in the Right Segments
Developers will see this as an opportunity to rekindle sales efforts, especially in the mid-range and affordable segments where demand is expected to be most responsive. Improved buyer sentiment and financing conditions may lead to an uptick in bookings and sales, encouraging developers to gradually roll out new launches or reintroduce existing offerings with more attractive financing incentives tailored to current market conditions.
While mid-range and affordable homes may see the most immediate uplift, renewed interest in the high-end segment may also emerge especially among upgraders or long-term investors seeking to take advantage of more favourable loan terms. Developers who offer value-driven products in well-connected, liveable locations will be best positioned to capitalise on this momentum.
Positive Spillover Effects on Oversupplied Segments
On the flip side, Malaysia’s market still has an inventory overhang in certain segments, notably condominiums and subsale units. With greater affordability, buyers may begin to absorb available stock in the secondary market, helping stabilise prices and prevent further softening in previously oversupplied areas.
Simultaneously, in more sought-after locations such as prime suburbs, increased demand could encourage more rational price growth driven by genuine need rather than speculation. This kind of steady activity is a positive sign of a maturing market responding to real financial conditions.
A Timely Signal for a Market in Motion
According to our H2 2024 Malaysia Consumer Sentiment Study, 33% of respondents intend to buy a home in one to two years.
The recent OPR cut may serve as that long-awaited signal that could create a more favourable lending environment and reinforce confidence among those who were previously undecided. While this rate adjustment is a promising step, shifts in consumer behaviour and market response typically take time to unfold. Nonetheless, this adjustment could mark the beginning of a more accommodating phase to support Malaysia’s economic resilience. With transaction volumes holding steady and buyer confidence gradually strengthening, the latest monetary move will likely help sustain positive momentum across the property sector.
As the market evolves in tandem with demographic shifts, affordability concerns, and economic cycles, clear and timely insights are more important than ever. At PropertyGuru and iProperty Malaysia, we remain committed to helping Malaysians make confident, informed property decisions whether they are stepping into the market for the first time or planning their next move.
(Web Source: https://www.businesstoday.com.my/2025/07/15/opr-cut-timely-for-home-buyers-and-developers/)