BI Rate Rises; Mortgage Instalments Set to Grow More Expensive

JAKARTA, KOMPAS.com - The BI Rate’s rise to 5.25 percent on Wednesday, 20 May 2026, is expected to push up home loan instalments. This follows predictions of higher commercial lending rates, including non-subsidised KPR, as a spillover from the BI Rate increase. ‘Indeed the current conditions are very challenging. The BI Rate increase will certainly drive up commercial rates, including for non-subsidised KPR. Its effects will surely burden prospective buyers or consumers who are currently repaying,’ said the Vice-Chairman of REI, Bambang Ekajaya, when contacted by Kompas.com on Wednesday, 20 May 2026. Bambang said the impact of the BI Rate increase on the property market is not expected to be felt directly. He said the impact is likely to be felt in two to three months. On the other hand, the property market currently faces significant challenges as well. Bambang noted that pressure on the property sector does not only come from potential rises in KPR rates. He said global conditions can also affect construction costs. He said that if the Middle East conflict has not yet subsided, construction costs are expected to rise. ‘Moreover, if the war in the Middle East is not resolved, construction costs will rise sharply. If KPR rates also rise, buyers will certainly hold back,’ he said. He added that such a situation could create layered pressure for the property industry. On the one hand, property prices may rise, while on the other hand, consumer purchasing power is still weak. Bambang said raising property selling prices is not an easy step for developers to take in the current conditions. In this situation, property sector players are currently tending to take a cautious approach in conducting their business. He said the chosen strategy now is to continue marketing projects that are already available while waiting for market conditions to normalise. ‘Right now the best approach is wait and see while continuing to market what exists,’ he said. He added that some developers are expected to hold off on new project development until conditions return to normal. ‘But new projects, in my view, should be put on hold until everything returns to normal,’ he concluded.