How much will mortgage repayments rise with OPR increases?

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Mortgage Repayments Could Increase by Three Per Cent Due to OPR Hikes

Maybank Investment Bank (Maybank IB) has projected that mortgage repayments could rise by three per cent as a consequence of increases in the Overnight Policy Rate (OPR). This projection is based on an anticipated 100 basis point (bps) hike in the OPR between the second half of 2022 and the first half of 2023.
Projected OPR Increments

Maybank IB's chief economist, Suhaimi Ilias, anticipates that Bank Negara Malaysia (BNM) will implement a series of OPR adjustments. These are expected to include a 25 bps increase within the current monetary policy meeting, followed by another 25 bps by the fourth quarter of 2022. A further 50 bps increment is forecast for the first half of 2023, bringing the total anticipated increase to 100 bps.
Impact on GDP Growth

Beyond the effect on mortgage payments, each 25 bps increase in the OPR is estimated to reduce real gross domestic product (GDP) growth by 0.2 percentage points over a 12-month period. This indicates a broader economic impact stemming from the monetary policy adjustments.
Drivers for OPR Increase

The rationale behind BNM's anticipated OPR hikes is attributed to escalating domestic demand and a rising core inflation rate. Maybank IB has consequently revised its inflation forecasts upwards, projecting 3.4 per cent for 2022, up from a previous estimate of 2.7 per cent, and 4.1 per cent for 2023, an increase from 2.5 per cent. These revised inflation expectations incorporate factors such as higher food prices, including cooking oil and chicken, and potential adjustments to fuel subsidies.

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How much will mortgage repayments rise with OPR increases?

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