BI Rate at 5.25 Percent, Mortgage Rates Expected to Rise

JAKARTA, KOMPAS.com - The BI Rate increased to 5.25 percent on Wednesday, 20 May 2026, and is expected to impact the rise of commercial lending rates, including non-subsidised home loans (KPR).

This condition is viewed as potentially increasing the burden on the public, both for prospective homebuyers and borrowers still repaying loans.

‘Indeed the current conditions are very challenging. The BI Rate increase will certainly push up commercial lending rates, including for non-subsidised KPR. The effect will surely be burdensome, both for prospective buyers and borrowers who are repaying,’ said the Deputy Chairman of REI, Bambang Ekajaya, when contacted by Kompas.com, on Wednesday, 20 May 2026.

He said the impact is likely to be felt in two to three months. On the other hand, the property market is still facing quite a heavy set of challenges.

‘Therefore the effect will only be felt in two to three months. Meanwhile the property market remains difficult,’ he said.

Bambang added that pressure on the property sector does not only arise from the potential rise in KPR interest rates. He noted that global conditions can also influence construction costs.

According to him, if the situation in the Middle East war has not abated, construction costs are expected to rise as well.

He added that this situation can create layered pressures for the property industry. On one hand property prices could rise, while on the other hand consumer purchasing power is still seen as weakening.

Bambang said increasing property prices is not an easy move for developers in the current conditions.

‘Thi s eflects the current market context. Meanwhile, as developers, raising property prices is not the right option, given weakening purchasing power,’ he said.

In this situation, property business players are currently inclined to take cautious steps in conducting their business. He said the strategy currently chosen is to continue marketing projects that are already available while waiting for market conditions to improve. He added that some developers are expected to pause plans for new projects until conditions return to more stable levels.

‘T But new projects, in my view, should be held until everything returns to normal,’ he concluded.