KUALA LUMPUR, July 1 — Malaysia’s household debt rose to RM1.73 trillion at the end of March, but the country’s debt burden eased slightly relative to the size of the economy while borrowers continued to demonstrate a strong ability to repay their loans, according to the government.
Prime Minister Datuk Seri Anwar Ibrahim said household debt stood at 84.4 per cent of gross domestic product (GDP) at the end of the first quarter, down marginally from 84.7 per cent three months earlier.
According to the government's assessment, debt growth has remained broadly in step with economic expansion and income gains, easing concerns that households may be becoming increasingly overstretched amid uncertainty in the global economy.
In a written parliamentary reply, Anwar, who is also finance minister, said the government and Bank Negara Malaysia continued to monitor household indebtedness, repayment capacity and broader economic conditions to ensure families could weather potential external shocks.
“The impaired household loan ratio remained stable and low at one per cent at the end of December 2025, compared with 1.1 per cent in June 2025,” he said in response to a question from Aminolhuda Hassan (PH-Sri Gading) on how the government was assessing Malaysians’ financial resilience in the event of a global recession.
Other indicators also pointed to stable household finances.
Anwar said the median debt service ratio for outstanding household loans stood at 33 per cent, while the median debt-to-income ratio remained unchanged at 1.3 times, suggesting debt growth continued to be supported by rising incomes rather than excessive borrowing.
“Overall, households continue to have sufficient capacity to meet their debt obligations,” he said.
He added that the government remained committed to ensuring household debt expanded at a pace consistent with borrowers’ ability to repay.
As geopolitical tensions in the Middle East continue to create uncertainty for businesses and consumers, Anwar said banks would continue providing targeted repayment assistance to affected borrowers, including loan restructuring, rescheduling and temporary repayment holidays.
He said the targeted approach reflected Bank Negara’s assessment that the economic impact of the conflict differed across households and businesses, allowing assistance to reach those facing genuine financial strain while preserving the stability of the banking system.
Affected individuals and businesses were encouraged to contact their banks as early as possible to discuss repayment arrangements suited to their financial circumstances, he added.
