A HIKE in the overnight policy rate (OPR) results in an increase in monthly repayments for house loans. The impact on borrowers, particularly the B40 and some in the M40 groups, is significant as it adversely affects their monthly disposable income.
Considering the necessity of housing and the long-term commitment of loan obligations with fixed monthly amounts, borrowers find themselves in a challenging situation when managing their finances.
The only viable solution seems to be reducing other monthly expenses to ensure that they can pay their house loans and avoid the repercussions of non-payment.
In addition to mortgage payments, expenses for food, transport, utility bills and education are vital in maintaining a satisfactory quality of life.
These essential expenses cannot be reduced without negatively impacting one’s standard of living.
According to a 2019 survey conducted by the Department of Statistics, 40% or 2.91 million households fall into the lower income B40 group, with monthly household incomes below RM4,850.
The OPR hike has significantly increased their vulnerability, and they require immediate support.
Banks must exhibit greater consideration in their approach to this matter.
It is crucial to establish a proper mechanism that ensures fair implementation for all borrowers, taking into account their diverse capabilities.
Considering the circumstances, it may be worthwhile for Bank Negara Malaysia to explore a system in which the OPR can be tailored to borrowers’ income levels.