BNM: Loan rejection is ok, no need to ease lending conditions

Reported in The Star, an article quoted Bank Negara sources which said that there are no reasons to ease lending conditions. Actually, I read a similar view from the Singapore side just a few days ago. The Singaporean government is reluctant to ease cooling measures even if property prices have started easing. They are more afraid of speculative activities instead. Bank Negara Malaysia (BNM) sources said that the main reason not to ease the lending conditions is because the housing loan rejection rates are reducing from 30 percent in 2014 to just 20 percent in 2015. In fact, housing loans are still growing at double digits!

Secondly, BNM sources said that there are no special restrictions imposed by BNM. Today, the banks have a broad set of guidelines and when developers are asking for loosening of restrictions, what sort of restrictions are they referring to? Maximum tenure of 35 years is so that retirees are not burdened with debts and buyers for third property onwards should have 30 percent downpayment. If developers are talking about easier mortgage financing, it meant that the developers are transferring their burden to the households. BNM wants quality loans and not for buyers to buy beyond their affordability causing the buyer to default later. The source also does not agree to have the Developer Interest Bearing Scheme to be reintroduced saying that this simply meant that buyers are saddled with high instalments.

I personally disagree with anyone who tries to stretch and buy at the maximum limit of their capacity. It is not endangering just himself because if a lot of people does the same and suddenly a big number of them got retrenched, the property market may suddenly be destabilised. For anyone looking for quick money, perhaps the stock market may be a better BET. Alternatively, a casino would provide immediate results. Hit it, or Hit by it. Property remains a necessity which meant that if we invest and buy a fewer units, in the future, we should earn good returns. Assuming majority intends to rent, the units would still have to be owned by someone, right? Happy buying.

written on 20 Apr 2016

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