BI Rate Forecast to Reach 6.75%, Mortgage Rates Expected to Rise

PT Sarana Multigriya Finansial (SMF) projects that Bank Indonesia’s (BI) benchmark interest rate could still rise to 6.75% by the end of the year. This aggressive monetary stance is seen as necessary to ease pressure on the rupiah exchange rate. SMF Chief Economist Martin D. Siyaramual stated that the potential rate hike would directly impact the cost of funds, making mortgage (KPR) rates more expensive and posing a challenge for the housing finance industry. “To reduce pressure on the rupiah exchange rate, Bank Indonesia must take a more aggressive position. Based on our projections, the BI Rate could reach 6.75% by year-end,” Martin said during a press conference on Wednesday (22/7/2026).

He added that the housing sector faces a dual challenge, as the government’s substantial funding needs amid declining foreign exchange reserves are likely to push up bond yields. “If the government wants to borrow more, it must offer more attractive yields. Consequently, state bond yields rise, and SRBI yields also increase. The implication is that all financing institutions will face a higher cost of funds because the reference is government bonds,” he explained. SMF, as a secondary mortgage financing institution that regularly raises funds through the bond market, will see its bond issuance costs increase accordingly.

Despite these funding pressures, Martin emphasised that the housing sector still has room to grow, with adaptive strategies being key to maintaining business sustainability. Meanwhile, Bank Indonesia’s Board of Governors meeting on 21-22 July 2026 decided to hold the BI-Rate at 5.75%. However, BI Governor Perry Warjiyo announced the expansion of incentive policies to encourage foreign capital inflows and strengthen rupiah stability, alongside deepening the money and foreign exchange markets.