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Bank Negara: No reason to ease lending conditions.

PETALING JAYA: With the overall rate of housing loan rejections being reduced from about 30% in 2014 to about 20% in 2015, there is no reason to ease lending conditions, according to Bank Negara sources.

Borrowers need to have a downpayment of 30% from the third house purchase onwards. The maximum loan tenure is currently 35 years. Increasing the loan tenure would result in retirees with debts, which Bank Negara does not want, the source said.

According to the source, easier mortgage financing that property developers are currently calling for essentially means “improving their own balance sheet but transferring their burden to the households”.

According to an income/affordability computation, a borrower with a mean monthly income of about RM6,000 can only afford a house of about RM350,000 and those earning about RM2,500, a RM50,000 house.

Even with this “simplified and imprudent” computation, which does not take into account existing liabilities like cars and study loan repayments, the inflation rate, the cost of living or savings, the maximum price is about RM350,000 for a monthly mean income of RM6,000.




Banks: Eligible first time home buyers will get financing

KUALA LUMPUR: The Association of Banks in Malaysia (ABM) says first time home buyers who are eligible will continue to be able to obtain financing.

It explained that it was crucial for these buyers to also recognise the need to make sound decisions of their own affordability based on their financial circumstances.

“The business of our member banks is in the main lending or extending credit. There is no intention whatsoever to make lending more difficult, particularly for first time home buyers,” ABM said in a statement on Monday.

ABM had issued the statement to clarify a recent report on banks being “overly cautious” on mortgage loans for first-time home buyers.

The association also pointed out that for first time home buyers, the bank would usually finance up to 90% of the price of the property.



Malaysia, Thailand, China have biggest rise in household debt

LONDON: An estimated US$6.2 trillion jump in emerging market household debt should stir regulators into action, given the red flags raised by rising problem loans and slowing economic growth, the Institute of International Finance said in a report.

The IIF estimated that combined global household debt was now more than 44 trillion and that $6.2 trillion of a $7.7 trillion rise in the amount since 2007 – prior to the global financial crisis – was in emerging markets.

The three biggest rises in the household debt-to-GDP gap were in Thailand, Malaysia and China.




Over 90% of Malaysians are ‘bankrupt’

As the ringgit has resumed its weakening against the US dollar, pessimists here are repeating the old litany that the slump in the Malaysian currency is due to the country going bankrupt.

While there have been many others who try to explain that it’s actually due to the US dollar strengthening against all global currencies, including the ringgit, local pessimists aren’t quite wrong – many of us in Malaysia are technically ‘bankrupt’, and hence the country as a whole maybe.

This shocking truth should come as no surprise because by all economic measures, most of us are living far beyond our means.


Beware of housing bubble – Sin Chew Daily

The rapid and massive housing price hikes in the country over the past few years have left middle and low-income earners dumbfounded. As house prices have gone beyond the affordability of the general public, “I can’t afford a house” has become the frustrating cry of many wage earners and young people.

The sustaining housing price hikes mean that wage earners have to work hard and save money for a few years more and postpone their house buying plan. They have no choice but to accept the fact. Urban Well-being, Housing and Local Government Minister Datuk Abdul Rahman Dahlan has called on the people, particularly young people in urban areas, to change their mindset of “I’m now 25 years old and it is time to own a house”, and consider renting a room or a house first.

However, in some big cities like Kuala Lumpur, rentals could be high and in the long run, it is afraid to be the main consideration of those who do not own a house whether renting is really more cost-effective than buying a house with investment potential.

– See more at: http://www.themalaysianinsider.com/sideviews/article/beware-of-housing-bubble-sin-chew-daily#sthash.k4eYQQAY.dpuf

More residential units, lower rents

KUALA LUMPUR: With the total existing supply of residential properties in Selangor, Kuala Lumpur and Putrajaya swelling to nearly 1.8 million units to-date, rental rates are softening even in prominent locations despite housing demand out­stripping supply in Greater Kuala Lumpur (Greater KL).

“Selected property sub-sectors [and locations] may undergo a period of consolidation in terms of slower market activities, pricing and rentals,” says Knight Frank Malaysia research and consultancy executive director Judy Ong.

The slowdown is impacted by the series of cooling measures, uncertainties surrounding the impending GST (goods and services tax) implementation, and a slowdown in the oil and gas (O&G) sector and its related industries amongst others, she adds.

Going forward, with a high supply pipeline of existing and incoming pro­jects, the rental market will continue to face further pressure in selected locations where there are weak occupational demand and high project completions, says Knight Frank, an independent global property consultancy, in its Jan 23 report.

And yields will continue to be com­pressed, in line with the lagging rental market, it says. “In the high-end condo­minium segment, demand continues to trail supply, and with an estimated 4,929 units anticipated to enter the market by the first half of this year, coupled with the high level of existing supply in the market, the overall outlook is one of caution.

“Amid heightened competition and a challenging market environment, devel­opers are expected to review their pricing and marketing strategies to ensure prod­uct differentiation in a move to improve the sales of their projects,” it adds.



Household debt continues to moderate on prudential measures


The amount of new debt assumed by households was RM3.8bil lower in 2014 compared with the previous year, with borrowings heavily concentrated in financing secured by property and financial assets.

For the year as a whole, households accumulated an additional amount of RM7.3bil in outstanding credit card balances and personal financing, accounting for less than 40% of the average annual increase in credit card and personal financing recorded between 2010 and 2013, with 92% of the outstanding credit card balances being current.

Bank Negara said new household borrowings were of higher quality, as an estimated 80% of new loans had a debt service ratio (DSR) for all outstanding debt of less than 60%.

For borrowers with monthly earnings of RM3,000 and below, the share of new loans with a DSR of less than 60% was high at 91.8%, while the share of new loans with a DSR of less than 40% remained stable at about 58%.

It noted that this was due to households having greater buffers and flexibility to weather financial challenges.

“At the aggregate level, household financial buffers remain strong. The ratio of household financial asset-to-debt has consistently been maintained at more than two times over the past three years, as the pace of growth in household debt was brought more in line with the growth in household financial assets,” it said.

Setia Alam house buyers sue developer, PKNS

SHAH ALAM: Ten house buyers in Setia Alam here, have filed a lawsuit against a housing developer and Selangor State Development Corporation (PKNS).

Ruhani Baharum, 46, Tham Kok Pew, 53, Wan Mohd Wan Hashim Yusoff, 40, Mohd Nizam Abdul Rahman, 38, Hong Hong Chik, 41, Hing Aik Choong, 37, Ng Kim Thong, 45, Razmair Shah Abdul Razak, 37, Nordin Hisham Mohd Hanapiah, 46, and Ku Kean Thong, 45, filed the suit on Wednesday, through law firm S.Surendran  and  Co.

In their statement of claim, the plaintiffs said in 2010, Sazean Development Sdn Bhd initiated a residential development project on a 143-hectare freehold property known as Anjung Sari@ Bandar Setia Alam, owned by PKNS.



Bank Negara sees lower inflation, maintains OPR

KUALA LUMPUR: Bank Negara Malaysia (BNM) forecasts inflation for 2015 to be lower that earlier anticipated due to due to the lower energy and commodity prices.

In a statement released on Wednesday, the central bank said at the Monetary Policy Committee (MPC) meeting, it was decided that the overnight policy rate (OPR) would be retained at 3.25%.

CTOS to introduce new credit scoring system

KUALA LUMPUR: A new credit scoring system will be introduced next year to help banks verify customers eligibility for loans and help consumers secure better loan rates.

The CTOS-FICO Consumer Risk Score will be a more comprehensive database of information gathered from various means, including the borrowing and repayment history as well as other information available about the individual online.

CTOS Data Systems chief executive officer Eric Chin said consumers would also benefit from the scoring system as those with high scores would have a strong case to negotiate for better interest rates on future loans.

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