Banks are refusing to lend or buyers are unable to buy? Different things… ok.

If we like a property and we need a place to stay, would we buy? If we apply for a home loan for that particular property that we like with the bank, would they lend us? The answer to both is a YES. The similarity to both would be ‘affordability.’ We read about articles that the banks are no longer lending. We have also read about buyers are no longer buying. Hopefully, we do not think too much or believe too much about all these because it is untrue. As per National Property Information Centre (NAPIC), the total transactions in terms of units for 2016 was still six figures. If buyers are not buying and banks are not lending, then these numbers must be fabricated..? Fortunately, NAPIC is not in the business of fabricating numbers. When it’s down, they show it is down… Today, let’s talk about two separate issues; banks are refusing to lend and buyers are unable to buy.

Banks are in the business of LENDING MONEY. They can offer us a credit card or a car loan or for our property purchase. If they do not lend us money, they will NOT earn profits. Some latest results? Well, all the banks that I have read thus far has shown good profits. For example: CIMB’ss net profits up 38 percent in their latest half.  Meanwhile Malaysia’s 4th largest lender, RHB Bank’s latest quarter shows a net profit increase of 43 percent.  Another set of result? Maybank’s net profits are up 43 percent in their Q2. For them to earn higher profits, they need to lend. I hope everyone has gotten the point? No lending, no profits. Higher profits, higher lending. Of course, when the economy slows down, less people will borrow and of course the results would no longer be so positive. These days, even credit card sales people are having a hard time, right fellow Malaysians?

Buyers are unable to buy. When the people starts to lose their jobs, they would start cutting back on home purchase. Seriously, they would definitely rent instead. At this moment, the unemployment rate for Malaysia is at 3.4 percent. It’s true that there are industries which are slowing down or even closing down. However, a few of my good friends are now in Europe. Their company of over 100 staffs are having their annual company trip and it’s to the EUROPE. I think my company’s trip this year would be to somewhere within Malaysia as long as I can get something acceptable based on the company’s budgets. Second reason, property prices are way too high. If possible, do google for RUMAWIP, Rumah Selangorku and even PR1MA. If buyers could accept secondary properties, there are still loads of choices. Okay, they are NOT in hotspots….. Well, I think many are saying it’s buyers’ market today? 🙂

Both statements are actually not true, in my personal and humble opinion. Affordability is an issue because of sentiment in combination with acceptability. Thus, when we look a little harder, opportunities are available. Hey, even auctions could be a good hunting spot now. There are certainly lesser interest today. Happy thinking and thinking. Cheers.

written on 4 Aug 2017

Next suggested article:  Banks are lending MORE to the property market; 8 percent higher than 2015


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