New rules for property buyers
These are new rules set by Bank Negara with the aim of helping to reduce household debt in the country.
Before the new caps, property buyers could take loans for up to 45 years, while personal loans could be paid back over a period of up to 25 years.
Bank Negara is acting because Malaysia’s household-debt-to-Gross Domestic Product (GDP) ratio is a high 83%. It is the highest in emerging Asia.
The stricter lending guidelines also saw the central bank prohibiting the offering of pre-approved personal financing products.
These new measures to tackle household debt will also be extended to all financial institutions and credit cooperatives regulated by Bank Negara, the Malaysia Co-operative Societies Commission, Malaysia Building Society Bhd, and Aeon Credit Service (M) Bhd.
All these institutions will also need to follow responsible lending limits. New borrowers, especially those with lower incomes, can only take on debt amounting to 60% of their monthly take home pay.
The new limits will not affect loan applications made before yesterday.
Bank Negara governor Tan Sri Zeti Akhtar Aziz, in a briefing yesterday, said the household debt was not yet at an alarming level, but based on present trends it would eventually be so.
Extremely long property loan periods “encourage excessive debt accumulation by households and increases the vulnerability of this (the household) sector,” she said.
Industry players said the measures would have a limited impact on the property market because the older generation of Malaysians had already bought into the property cycle.
They said the latest caps would mainly affect the younger generation.
“They are the ones who will need loans with the extra tenure, not the older generation who are mainly able to afford (higher monthly repayments),” said IOI Properties’ director Teh Chin Guan.
“In the short term, the level of affordability for the younger generation will be lower at today’s prices,” he added.
Elvin Fernandez, managing director at property consultant Khong & Jaafar, said these moves by the central bank should be applauded because property loans with a tenure of more than 40 years was not advisable.
Real Estate and Housing Developers’ Association of Malaysia president Datuk Seri Michael K.C. Yam believed the measures were a “good pre-emptive move because Malaysians are not very disciplined when it comes to these matters”.
“In other countries the maximum tenure is usually 25 years or until the person reaches the retirement age of 55,” he added.
Federation of Malaysian Consumers Associations president Datuk Marimuthu Nadason also supported the new measures.
“But I urge Bank Negara to work with civil societies like us on financial literacy education, which Malaysians sorely lack,” he said, pointing out that 51 people were declared bankrupt daily in the country.
Korisatan Karuppiah, Penang Consumers Protection Association president, said borrowers should be allowed to repay their loans ahead of schedule, without penalty.
“The lenders argue that they have already made plans with your money over the tenure you agreed with, and that paying back the sum early affects their plans,” he said.
He said the penalty was a fine, of between RM10,000 and RM35,000, depending on the size of the loan.
Source: StarProperty.my
This is good, one more action taken by BNM to reduce /curb the Malaysia household debt.
Is this all that bmn can come up with ???
where are the curbs on the speculations to prevent the unjustified price hikes ???
where is the curbs / ban on DIBS ???
compared this to other country like singapore , china & hk where a slew of major measures have been imposed continuously & promptly ….
totally irresponsible n not commited to curb the rampart speculations
those sleeping heads at bmn should be sacked for not carrying out their responsibility & duty …..
getting paid with taxpayers money but not doing your job … shame on you bmn !
@aah dog
what is bmn?
this is msia..what else do u expect?
This is really good. Let’s see when the bubbles happen, then I’ll grab the house like hot cakes.
Believe me this won’t work to curb speculation, because many not affordable in buying property are blaming government for not doing anything…. so bnm only do something to please those people who hate speculators….
In fact, bnm like speculators and flipping because got tax from profits….hahaha..hehehe 45years to 35years will make different …lol only those so hai will celebrate and happy that bnm finally do something….In conclusion, bnm has no intention to curb speculate….
may be tis action will affected those low income ppl not able to get their loan for the first house…since they need to paid more for deposit…
the intense speculations going on is a classic example of human greed that know no bound … equally shocking is the authorities not taking action specifically targeting the speculators to curb the rampant speculations which distort the prices and fueling price escalations … as a result prices of goods across all sectors also rises … causing much hardship to the people especially the poor, the homeless & the low income group….
Justice must must not only be done but must be seen to be done …
If Bank Negara were to curb DIBS then the housing developers would surely come up with some other new schemes instead , so the curbing in the end will not produce the desired result .
Many buyers managed to become speculators by relying heavily on housing loans to buy new properties with DIBS, and this was due to the easy lending habits by so many financial institutions before. Without those easy to get mortgages , surely DIBS would not be able to attract speculators in droves .
So by putting in place the credit crunch , it will be difficult for housing developers to coorporate with any established financial institutions to come up with easy mortgages for their malaysian buyers like what they used to do before . Any scheme that they come up with would be useless if the speculators fail to get the loans in the first place .
So this credit crunch will impact the primary market in slowing down the buying craze from malaysian buyers . The secondary market has been very slow before , with this credit crunch it would come to a stand still !
I think when it comes to penang properties, those who depend heavily on bank loans , personal or housing , will get affected by this move from bank negara no matter what income group category they are in .
Yes, i agree with you yeahright. Wait and see, more control will b taken during budget 2014 to curb property price.
@yeahright
@sasandra
Price crushing down soon? Waited so long d.
Ever wonder why its easy for ppl to obtain housing loans when buying new properties but the same cannot be said when buying subsale properties ?That’s because the housing developers were able to cooperate with financial institutions so that their buyers would be able to obtain loans fast and easy with less hassle . The sellers for subsale properties are not able to do that, thats why primary market become super active but subsale market become super slow, and Malaysia’s household-debt-to-Gross Domestic Product (GDP) ratio has become the highest , so obviously the high debt is the result of all the buying frenzy of the new properties!
Now bank negara is saying no more easy loans for new properties !
The stricter lending guidelines also saw the central bank prohibiting the offering of pre-approved personal financing products.
These new measures to tackle household debt will also be extended to all financial institutions and credit cooperatives regulated by Bank Negara, the Malaysia Co-operative Societies Commission, Malaysia Building Society Bhd, and Aeon Credit Service (M) Bhd.
The housing developers have been relying heavily on their cooperations with the financial institutions to raise the affordability level of their would be customers to attract them to buy the properties. But now they are on the same level as the subsale sellers, no more easy mortgages for their customers with the tightening of the loans by the bank negara !
The “heart” of property speculative buying is ‘easy mortgage” , so by cutting the blood supply to the heart , speculative buying will be dead.
Cars sales will be crushing down? My car loan installment is higher than my housing loan.
Soon!! But you need to wait longer..
@Bryant
I can wait.
Whichever higher depends on your choice…
@islander_ori
Should have bought cheaper car and better house in the first place. Too late now. Sigh…
35 years loan will still make plenty of speculators unless revise to 15 or 20 years
Anyone observed in mudah.com, this two property pearl garden and ocean view with lower price advertise.
Pearl garden 365k b4 430k ocean view 210k b4 400k. Not sure this auction units or smaller Sqft. If cal the agent sure they wil say sold out.
Revise to 15 or 20 years will kill those genuine buyers or the young graduate.
How about 50% down payment or max 50% loan amount for 2nd residential property buyer?
beware of the Big Rip Off … the unprecedented escalating soaring prices is artificially driven by greedy speculators working hand in hand with unscrupulous developers and shady housing agents and aided by bankers ….
@bubble
I m tired reading this statement. This is free market and dont be jealous those flipping property.
When u kill the demand, what will happend to the price? Think bout it.
If demand goes down, owner try to hold until bankruptcy if cannot hold or no buyer.
Then the property will be in auction list.
But the price won’t be at your expectation yet until no new project launching (~really oversupply).
Just wait lar…. be patient…
Would the developers slowing down supplies?
Latest property news, QE3 tapering /US to impact property market in Asean country include Malaysia, area such as Penang, Kl and Johor. hope developer wil work closely with fed/stated goverment to built more affordable home. Still no news on penang state affordable projects in Island. Penang ppl really need 700sqft 900sqft home below 400k.
Sasandra, sound like a spanish to me. DO u really need the affordable home so much. I dont need affordable home, i can be very poor coz i am from mainland but not poor to not owning a few properties in penang and klang valley. Im in my mid’ 20’s and i dont even have a property with me when i start working at 2008. My parents are not rich either they can only afford a kapchai proton. I dont see other citizen is crying for an affordable housing as much as in Malaysia. Why do we need to have such a low and backward mentality. You dont give excuses for blaming the government for not providing us an affordable home. We decide our own destiny, we manage our own wealth and we are responsible for ourself and not others. So stop blaming the government, developer, economy and what else. This will never stop ending, bla bla bla…
Hi gangstaland,
sasandra is not asking for affordable homes for him/herself, but for the people of Penang. Well, I won’t disagree with you that we decide our own destiny, but different people decide their destiny based on different parameters. Some make money the priority, some make interest, some make social contributions etc, and sometimes things don’t turn out the way you planned it. But that’s not the point here.
In any society, you surely have a spectrum of people with varying financial status. You can’t be having a society with all doctors and lawyers, can you? You can’t be having a society with all rich businessmen and engineers. Who is going to run the cashiers at the shops and banks then? Who is going drive the buses? Who is going to teach your children at schools? Who is going to put out the fire? Who is going to enforce the laws? Who is going to deliver the mails to your doorstep? Who is going to come clear all the debris after a freak storm? Who is going out to the sea to catch fish so that you can enjoy your meal of fresh fish?…:)
We can’t avoid a society with people in the high, middle and low income group. With the current free and easy policy for foreign property ownership in Penang, it is important that the state government drives affordable housing. Without HDB in Singapore, more than half of all singaporeans today would be living in slums.
Gangstaland sound like arrogant and selfish to me.
heard that affordable housing is now going to be given with condition of 1st home buyer and submitted application form to the MPPP. But Developers are not happy cause they are forced to earn less to sell off with affordable price. So they are going to top up these losses on normal sales price, hence property price will increase again.
If you are earning around 4-5K per month, either you cant afford or you are not entitled.. and most of them are at the age 25-35 taking salary job. The group i named them as ‘hanging in the sky’.
@sasandra
There are many apartments below 400k in Penang Island, like N-park for instance. Just local penang ppl feel no face for staying there.
@gangstaland
So you started working in your early 20s. Within 5yrs you seems to be very successful with your financial achievements since you own few properties in Penang and Klang. Thats pretty impressive to boast/fake in this forum. The way I see it, either you are a genius who worked really fast,smart and effective to obtain your destiny = money, OR you simply earn those money with some other means which of course you cannot tell us because its…maybe illegal? Interesting because a normal graduate probably hit a RM7-8K salary after 5yrs of working (considering a huge promotion, switch to other jobs). Then again, perhaps you are earning Pound Sterling in UK or you are just simply lucky when you bet toto or 4D (This could be true as I know people who hit first prize in 4D once every month)
So you see, you don’t expect everyone’s fate to be like you? Those who are less fortunate but HUMBLE do need affordable housing. It is the goverment’s responsibility to make this happen. It cannot be a non profitable organization to exceute such thing. One day, you might need affordable housing. You just never know what will happen in the future. The world is fair.
Plenty of affordable housing in Mainland, Sungai Petani, Bertam and even Balik Bulau!
But, people wants cheap yet in front of Queensbay , etc etc
Then, cry this unfair that unfair.
Example:
If you studied hard since primary school and becomes a surgeon then you will be rich now, then why didn’t study ? Easy to blame the sky and earth and not yourself
Affordable housing
Condo- RM300K in Main land, go and grab, even less than your wish list price RM400K!!
Any one? No ?
Some time, the way some if you comment, no common sense at all, no logic thinking, simply reflect your stupidity. Instead of compromising the type of property / location in view of your financial capability, you guys choose location first and start cursing why not priced at RM400K…
Then, start hallucinating – dreaming about crisis, crash, this and that
Sigh….. Stupid
@Hikato
hahahaha…funny. Let’s see if anyone will “shoot” you…
Yes, very funny, Mr/Ms Hikato must be brain surgeon with PHD qualification.
@Hikato
Good points Hikato. some points to add: the authority should shift job opportunities to mainland like encourage/incentive for moving factories there. There are vast of land there for development and just people mindset have to change. Building so called “affordable house” will not help. Youngster don’t like and only foreign workers will stay there.
I do agreed with what @Hikato said to certain extent.
If market crash, bank will tightened the loan requirement unless for those with cash at hand. And those with cash at hand wont be whinning away wont they.
Hokkien people call this Lam Pa Pak Lan (LPPL)
@Hikato
I do agree. “Affordable housing” is refer to the individual financial ability. If you are only afford to buy 150k apartment, then don’t go see the 500k condo. I am not bullshitting here. In fact, i have a real life experience where I started with 100k+ apartment and now I am able to upgrade myself and staying landed in penang island. I am not a brain surgeon nor a businessman, I am just a factory worker.
Young man, please don’t blame. Instead, there are a lot of 100k – 300k apartment available, even on the island.
N park, BJ court, villa emas, gambir height still affordable. There are many flats in Relau are less than 400k too. Do research more.
@Bryant
Hi Bryant, u got issue man. I dont hav to tell u how I get my wealth but can I sd that Im very lucky to hav such a good career path. I start to work when I drop out from my college. Then, I move on workin with a bank and studying part time. I started my job with only 1k basic salary. 2 yrs later,I move to a mnc company and soon I being transfer to oversea and earning USD. Well Bryant, Im trying to boast of fake it to the max. Anyway I will be graduating from my MBA this Oct. Cheers..
@Bryant
Hey brother, typo error la. Its 2006 instead of 2008.
@gangstaland
Dude, you’re weird..one moment you don’t have to tell me, the next moment you tell the whole forum about your “whatever”..u got issue man…Cheers..
MBA = Married by Accident? … Hahahaha…just joking.
Advance congrats to gangstaland on ur graduation, everyone here feel proud with ur achievement. Good job. Anyplan to continue PHD – Permenant Head Damage!
what are the authorities doing to bring down the unjustified intensely speculation-fuelled high properties prices … ????
National Housebuyers Association (HBA) honorary secretary-general Chang Kim Loong says house buyers who need loan tenures that are longer than 35 years are buying something that is far beyond their current income levels.
“In fact, most banks only give housing loans up to 30 years. Previously, only selected banks gave loans of up to 45 years (second-generation loans).
“HBA is against the second-generation loans as the second generation is born into debt,” he says, stressing that house buyers should always get something that is within their means
Chang also calls for a revision of the Perumahan Rakyat 1Malaysia (PR1MA) prices, which the HBA believes are just too expensive. The HBA had suggested a price of between RM150,000 and RM300,000.
PR1MA has just raised the ceiling price of their properties to RM450,000 and the maximum household income eligibility to RM7,500.
Chang, however, thinks much more needs to be done to reduce speculation in the property market, such as bringing back the Real Property Gains Tax, imposing higher stamp duty for buyers of multiple properties and a further reduction of Loan to Value ratio.
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those useless sleepy heads authorities especially those at bmm should be removed & replaced with those more capable & focused & with strong moral responsiblity to act in the interest of the masses especially the lower income group, the poor, the unpreviledged & the homeless …