Property consultancy IQI expects Bank Negara Malaysia (BNM) to maintain the Overnight Policy Rate (OPR) at 2.75% when its Monetary Policy Committee (MPC) meets on July 9, although it believes the central bank could still raise interest rates before the end of 2026 if economic growth and inflation remain stronger than expected.
IQI Co-Founder and Group Chief Executive Officer Kashif Ansari said the expected decision would mark one year of unchanged interest rates, providing much-needed certainty for homebuyers and businesses.
“We do not expect any change this week, and that would mark a full year of stable rates. For now, stable rates mean homebuyers know what their mortgage will cost. That predictability helps support confident, long-term decisions,” he said in a statement.
Q4 rate hike remains a possibility
While IQI’s base case remains for the OPR to stay unchanged throughout the year, Ansari said the central bank still has two policy meetings scheduled in September and November, leaving room for a possible 25-basis-point increase to 3.00% should economic conditions warrant tighter monetary policy.
“There’s a real possibility the MPC could raise the overnight policy rate at one of those sessions,” he said.
He noted that Malaysia’s economy continues to outperform many of its regional and emerging market peers, with gross domestic product (GDP) expanding 5.4% in the first quarter of 2026 despite moderating from the previous quarter.
However, Ansari stressed that any rate hike would likely be driven by stronger-than-expected economic momentum rather than current forecasts.
“Our team still believes the committee will leave the policy rate unchanged for the rest of 2026. If they do lift the rate toward the end of the year, that would be a result of unexpectedly high economic strength beyond what most analysts now expect,” he added.
Oil prices remain key inflation risk
Ansari identified energy prices as the biggest factor that could influence BNM’s policy decisions over the coming months.
He said the recent conflict in the Gulf had pushed oil prices higher, contributing to an increase in Malaysia’s headline inflation rate to 2.0% in May, the highest level in almost two years.
However, he believes inflationary pressures could ease if geopolitical tensions remain contained.
“If peace in the Gulf holds, inflation could fade. That would open the door to restoring the subsidised fuel quota, cheaper diesel for businesses and farmers, and lower shipping costs on imported and exported goods,” he said.
Lower energy prices would also benefit consumers through reduced transportation costs, lower airfares and stronger tourism activity, helping to ease the overall cost of living, he added.
Stable rates support property market
Ansari said stable borrowing costs continue to provide a favourable environment for Malaysia’s housing market by keeping mortgage repayments predictable.
He pointed to improving housing market indicators, with the Malaysian House Price Index rising 1.7% year-on-year to 235.2 points in the first quarter of 2026, while the average house price increased to RM507,533.
According to IQI, Malaysians purchased 52,936 homes worth RM22.6 billion during the first quarter, accounting for nearly 59% of all property transactions nationwide.
The consultancy also encouraged first-time homebuyers to take advantage of the government’s full stamp duty exemption, which remains available until the end of 2027.
For buyers purchasing homes priced at the maximum eligible value of RM500,000, the exemption could translate into savings of about RM11,000.
Looking ahead, IQI expects both house prices and transaction volumes to continue improving over the coming quarters, supported by stable interest rates, resilient economic growth and moderating inflation.
“In my view, the picture for the rest of 2026 is a positive one. Rates are stable today. Growth is strong. Inflation looks like it is already falling. All of this makes for a healthy environment for the property market,” Ansari said.
