Most Malaysians believe home loan rates are roughly the same across banks. They are not. The difference between the cheapest and most expensive major bank is 0.13% — which on a RM500,000 loan over 30 years adds up to over RM15,000 in extra interest paid. That gap is wider than it was two years ago.
Understanding how Malaysian home loan interest rates actually work — not the simplified version your banker tells you — is the difference between a property that generates cashflow and one that silently drains it. This guide breaks down the exact rates, the mechanics behind them, and what matters for 2026.
How Malaysian Home Loan Rates Work
Malaysian home loan rates are not set arbitrarily. They follow a structured system mandated by Bank Negara Malaysia (BNM) since January 2015.
Your home loan rate is calculated as:
Effective Rate = Standardised Base Rate (SBR) + Spread
Before 2015, banks used the Base Lending Rate (BLR) system, which was opaque and made it nearly impossible to compare banks. The Base Rate (BR) system was introduced to fix this. Then, from 1 August 2022, BNM replaced BR with the Standardised Base Rate (SBR) for all new retail floating-rate loans. The SBR is pegged directly to the OPR, so all banks share the same SBR — currently 2.75%. The spread is the bank's margin — determined by your credit risk, the loan-to-value ratio, and the bank's business strategy. If you still hear someone reference BLR or BR, they are either talking about a legacy loan or a pre-August 2022 facility.
The OPR Connection
The Overnight Policy Rate (OPR) is the foundational rate set by BNM. When BNM changes the OPR, banks adjust their SBR in lockstep. The pass-through is 1:1 by design.
Current OPR: 2.75% — cut from 3.00% in July 2025, the first reduction since 2020.
BNM cut the OPR from 3.00% to 1.75% during 2020 (COVID), then raised it back through 2022 and into May 2023 (reaching 3.00%). It held at 3.00% for over two years before the 25bps cut in July 2025. The Monetary Policy Committee meets six times per year, and every meeting since that July 2025 cut has been a hold.
For a deeper analysis of OPR mechanics and historical trends, see our OPR and mortgage impact guide.
Current Home Loan Rates: Bank-by-Bank Comparison
Here are the Standardised Base Rates (SBR) and effective lending rates for the six largest mortgage lenders in Malaysia, as of February 2026. Note: since August 2022, all banks share the same SBR (pegged to OPR). The effective rate differences come from each bank's spread.
| Bank | SBR | Typical Spread | Effective Rate | Notes |
|---|---|---|---|---|
| Public Bank | 2.75% | +1.47% | ~4.22% | Consistently competitive on spread |
| Hong Leong Bank | 2.75% | +1.53% | ~4.28% | Competitive for properties above RM500K |
| Maybank | 2.75% | +1.55% | ~4.30% | Largest mortgage book in Malaysia |
| Bank Islam | 2.75% | +1.55% | ~4.30% | Islamic base financing rate (equivalent to SBR) |
| RHB Bank | 2.75% | +1.57% | ~4.32% | Aggressive on refinancing packages |
| CIMB Bank | 2.75% | +1.60% | ~4.35% | Highest spread among the Big 6 |
Important caveats:
- The spread shown is a typical figure for a borrower with good credit (CCRIS clean, debt-service ratio under 60%) buying a first property. Your actual spread may differ. Banks compete on spread, not SBR.
- Bank Islam uses an Islamic financing structure. The "base financing rate" functions like an SBR for comparison purposes, but the underlying contract is a Musharakah Mutanaqisah or Tawarruq arrangement. The monthly payment is similar. The legal structure is different. See our Islamic vs conventional financing comparison for details.
- These rates apply to new housing loans for completed properties. Under-construction properties, commercial titles, and refinancing packages may carry different spreads.
Key takeaway: Public Bank offers the lowest effective rate at approximately 4.22%. CIMB is the most expensive at approximately 4.35%. Over 30 years on a RM500K loan, that 0.13% gap costs you over RM15,000 in additional interest.
Fixed vs Floating Rates in Malaysia
Here is something that surprises many first-time buyers: almost every home loan in Malaysia is a floating rate loan. Your rate moves when the OPR moves. There is no rate certainty.
Some banks offer fixed-rate packages, but they come with trade-offs:
| Feature | Floating Rate | Fixed Rate |
|---|---|---|
| Rate basis | SBR + spread (moves with OPR) | Fixed for 3-5 years, then reverts to floating |
| Typical rate | 4.22% - 4.35% | 4.75% - 5.25% |
| Premium over floating | — | +0.50% to +1.00% |
| Best for | Investors who track OPR and can absorb rate changes | Buyers who need payment certainty for budgeting |
| Availability | All banks | Limited packages, often promotional |
Fixed rates in Malaysia are not truly fixed for the full tenure. They are fixed for a promotional period (usually 3-5 years), after which the loan converts to a standard floating rate. This is fundamentally different from a US-style 30-year fixed mortgage.
For property investors, floating rates are almost always the better choice. You are already managing variable income (rental fluctuations, vacancy). Adding a 0.50-1.00% premium for temporary rate certainty rarely makes mathematical sense — especially with the OPR at 2.75% and expected to hold through 2026.
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How Rate Changes Affect Your Monthly Repayment
The OPR has been at 3.00% since May 2023. It will not stay there forever. Here is exactly what happens to your monthly repayment when rates move.
Scenario: RM500,000 loan, 30-year tenure, current effective rate 4.55% (Maybank baseline)
| Rate Change | New Effective Rate | Monthly Payment | Change vs Current | Annual Impact |
|---|---|---|---|---|
| Current | 4.55% | RM2,549 | — | — |
| +0.25% | 4.80% | RM2,619 | +RM70/month | +RM840/year |
| +0.50% | 5.05% | RM2,691 | +RM142/month | +RM1,704/year |
| +0.75% | 5.30% | RM2,764 | +RM215/month | +RM2,580/year |
| -0.25% | 4.30% | RM2,480 | -RM69/month | -RM828/year |
| -0.50% | 4.05% | RM2,412 | -RM137/month | -RM1,644/year |
The formula behind this:
Monthly Payment = P x [r(1+r)^n] / [(1+r)^n - 1]
Where P = principal (RM500,000), r = monthly interest rate (annual rate / 12), n = total months (360).
You can run your own scenarios with our cashflow calculator or follow the step-by-step method in our home loan calculator guide.
The Investor Angle
A RM70/month change sounds small. It is not.
If you own three investment properties each with RM500K loans, a 0.25% rate hike costs you RM210/month or RM2,520/year. That is roughly one month's maintenance fees for a mid-range Klang Valley condo.
More critically, for properties operating on thin cashflow margins — say RM200-300/month positive — a single 0.25% hike can flip your cashflow negative. This is why rate sensitivity analysis is not optional for investors. It is the first thing you should run before any purchase.
Key takeaway: Every 0.25% rate movement shifts your monthly payment by approximately RM70 per RM500K borrowed. If your cashflow margin is thinner than RM70/month, you are one OPR hike away from negative territory.
Historical OPR Trend: 2020 to 2026
Understanding where rates have been helps you assess where they might go.
| Period | OPR | Context |
|---|---|---|
| Jan 2020 | 3.00% | Pre-pandemic baseline |
| May 2020 | 2.00% | Emergency COVID cuts (4 cuts in 5 months) |
| Jul 2020 | 1.75% | All-time low — BNM's floor |
| Sep 2021 | 1.75% | Held at historic low for 15 months |
| May 2022 | 2.00% | First post-COVID hike begins |
| Sep 2022 | 2.50% | Rapid tightening cycle |
| Jan 2023 | 2.75% | Continued tightening |
| May 2023 | 3.00% | Peak of the tightening cycle |
| Jul 2025 | 2.75% | First cut since 2020 — pre-emptive amid global trade uncertainty |
| Feb 2026 | 2.75% | Held steady since Jul 2025 |
The 2020-2021 period was an anomaly. The 1.75% OPR was the lowest in Malaysian history. Anyone who locked in a home loan during that period got effective rates below 3.50% — levels we are unlikely to see again without another crisis.
The current 2.75% OPR is slightly below its pre-pandemic level, following BNM's pre-emptive 25bps cut in July 2025. BNM described the cut as a buffer amid global trade uncertainty, not the start of an easing cycle. Most analysts expect the OPR to remain at 2.75% through 2026, with the possibility of a further 0.25% cut only if global growth deteriorates significantly.
What This Means for Property Buyers in 2026
Three practical implications:
1. Rate shopping saves real money
The 0.13% gap between Public Bank (~4.22%) and CIMB (~4.35%) is not trivial. On a RM500K/30-year loan:
- Public Bank: ~RM2,456/month, total interest ~RM384,000
- CIMB: ~RM2,491/month, total interest ~RM397,000
Difference: ~RM13,000 in total interest. That is money you keep by spending 30 minutes comparing banks.
2. Build a rate buffer into your cashflow model
If your investment property only works at current rates, it does not work. Model your cashflow at current rate + 0.50%. If the numbers still hold, proceed. If they turn negative, walk away or negotiate a lower purchase price.
This is not pessimism. The OPR was 0.75% higher than today just four years ago. It can happen again.
3. The refinancing window is open
If you took a loan during the 2022-2023 rate hike cycle and your lock-in period has expired, check your current effective rate. Many borrowers are still paying spreads negotiated during a higher-rate environment. Refinancing to Public Bank or Hong Leong could save 0.10-0.20% — small percentages that compound into significant sums over decades.
For a detailed breakdown of legal costs, penalties, and the break-even calculation for refinancing, see our home loan calculator guide.
Rate Forecast: What to Watch
BNM does not publish forward guidance the way the US Federal Reserve does. But there are three signals that reliably predict OPR moves:
1. GDP growth. If Malaysia's quarterly GDP drops below 4%, the probability of a rate cut increases sharply. BNM has historically cut rates when growth weakens — the entire 2020 easing cycle was growth-driven.
2. Inflation data. CPI above 3% makes it very difficult for BNM to cut rates. As of late 2025, headline inflation averaged approximately 1.4% — well within BNM's comfort zone, with 2026 projected at 1.7% by the Ministry of Finance.
3. Ringgit stability. A weakening ringgit constrains BNM's ability to cut rates, because lower rates push capital outflows and weaken the currency further. The USD/MYR exchange rate is an underrated variable in OPR decisions.
Current consensus among Malaysian economists: OPR stays at 2.75% through 2026. A further 0.25% cut is possible but not the base case. No analyst is forecasting a hike.
The Bottom Line
Malaysian home loan rates in 2026 range from approximately 4.22% (Public Bank) to 4.35% (CIMB) for well-qualified borrowers. The OPR has been at 2.75% since July 2025, creating a favourable rate environment following the first cut since 2020.
For property investors, the key numbers to internalize: every 0.25% rate change moves your payment by RM70 per RM500K borrowed. Public Bank offers the best headline rate. But rate is only one variable — lock-in periods, flexi features, and legal fee absorption all affect your true cost. For a full comparison of loan packages beyond just rates, read our best home loan Malaysia comparison.
Build rate sensitivity into every deal analysis. The OPR will move eventually. The only question is whether your cashflow can absorb it when it does.