SEPTEMBER 17 — Malaysia’s household finances tell an interesting story.

At the end of 2025, household debt stood at 84.8 per cent of GDP.

Yet borrowers were largely keeping up with their commitments.

Bank Negara Malaysia (BNM) reports that the median debt-service ratio for outstanding household loans remained at 33 per cent, while overall household credit quality stayed sound.

That is reassuring.

But paying every instalment on time does not necessarily mean a household has room for the unexpected.

A family can have no arrears, meet every loan payment and still be vulnerable to a temporary loss of income, an unexpected repair or a sudden increase in essential expenses.

That distinction matters now.

On Sept 3, BNM kept the Overnight Policy Rate (OPR) at 2.75 per cent, where it has remained at every Monetary Policy Committee meeting so far this year.

Malaysia’s economy expanded by 5.7 per cent in the first half of 2026, while headline and core inflation averaged 1.8 per cent and 2.0 per cent respectively over the first seven months.

The next MPC decision is scheduled for Nov 5.

These are encouraging indicators.

But stability at the national level does not automatically translate into resilience at the household level.

For households, the more useful question is not whether the next OPR will be 2.75 per cent or something else.

It is how much financial breathing room remains if circumstances change.

DOSM data offer useful context.

Four categories — housing and utilities, restaurants and accommodation, food and beverages, and transport — accounted for 67.2 per cent of household consumption expenditure in 2024.

The figure does not mean Malaysian households are broadly in distress.

What it does illustrate is how several major spending needs compete for space within the same household budget.

Then come the financial commitments.

A mortgage may be manageable.

So may a car instalment.

A credit card payment, insurance premium or several smaller instalments may each appear affordable.

The vulnerability often lies not in any one payment, but in their accumulation.

Household fragility can develop quietly, one manageable payment at a time.

That is why we propose a simple Household OPR Stress Test.

List all fixed and recurring commitments — housing financing, vehicle loans, personal financing, credit cards, buy now, pay later (BNPL) instalments, insurance, education expenses and other regular payments.

Then test the household against a less comfortable month.

Could higher financing or living costs be absorbed without taking on more credit?

Could an unexpected RM1,000 or RM2,000 expense be met from available resources?

If income fell temporarily, how long could essential commitments still be maintained?

The purpose is not to create anxiety.

It is to reveal something an ordinary monthly budget can hide: how little room may remain after everything considered “affordable” has been added together.

This is also why affordability and resilience should not be treated as the same thing.

Affordability asks whether we can make a payment under today’s circumstances.

Financial resilience asks whether we can continue functioning when those circumstances change.

That distinction matters even more as financial decisions become easier and faster to make.

Credit itself is not the problem.

It supports home ownership, mobility, education and investment.

Nor should every BNPL transaction be regarded as harmful.

BNM notes that outstanding BNPL exposures remain small at 0.3 per cent of household debt, although their rapid expansion warrants close monitoring.

The concern is what happens when convenience makes the combined weight of our commitments harder to see.

A RM100 monthly payment feels small.

So does another RM150 instalment.

But payday does not experience those commitments separately.

This is why financial education must increasingly become just-in-time.

Consumers need more than reminders to budget and save.

At the moment a new commitment is taken on, they should be encouraged to consider how it changes their total financial obligations and their capacity to absorb a setback.

The question should therefore move beyond: “Can I afford this?” to: “What will I still be able to afford after this?”

BNM will continue to set monetary policy according to inflation, growth and economic conditions.

Households cannot control that path.

They can, however, control how much room they leave themselves.

Financial resilience is not simply the ability to keep paying when everything goes according to plan.

It is the ability to retain choices when something does not.

And perhaps the number households should watch most closely is not the next OPR.

It is how much of next month’s income has already been promised before next month even begins.

* Dr Amirah Shazana Magli is a Senior Lecturer at the Faculty of Business and Economics, Universiti Malaya, and Executive Committee Member of the Malaysian Consumer and Family Economics Association (MACFEA). Professor Dr. Mohamad Fazli Sabri is Professor at Universiti Putra Malaysia and President of MACFEA.

** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.