Some of us believe that it’s hard to get our loans approved these days. Perhaps it’s because the banks are no longer in the business of lending money. (Just kidding…) This assumption about the tough approval for a home loan is true even for a friend who’s a senior manager in a prominent developer. He took a half day leave and went to Bank Negara to check his CCRIS first before submitting his loan application. Anyway, his loan was approved and he has bought a landed property somewhere in Setia Alam. In fact, today, it’s possible to sign up for eCCRIS instead and we could now check our CCRIS status from anywhere at all. So, what’s really happening to the loan applications? The Real Estate Housing Developer’s Association (REHDA) has their own assessment on the loan applications approval but the below would be from Bank Negara Malaysia (BNM). (Here’s a comparison of home loans from 15 different banks.)
BNM says that housing loan approval rates for houses costing below RM500,000 have remained stable over the past few years at above 70 percent. In fact, the approval rate for houses priced less than RM250,000 was higher at 72.7% compared with 67% in 2012. More information at factwatch,my. REHDA said earlier that end-financing remained the main challenge for house buyers to own affordable houses. Highest number of loans rejected were for applications to buy houses costing RM500,000 and below. BNM asked property developers to increase the supply of affordable houses for the people. (I believe the developers are also doing because they are in the business of building homes.) BNM then shared that “In 2016, house prices in Malaysia were categorised as ‘seriously unaffordable’ by international standards with a median multiple of five times of annual household income.” Properties with median house price above three times the annual median household income is considered unaffordable, according to Demographia International. Full article in TheSundaily here.
Since banks have to lend money and developers have to build more homes and BNM has all the facts and figures, then who’s fault is it that the transactions numbers are lower than a few years ago and the number of unsold units continue rising? How about issues with the buyer themselves? How about the wrong perception that everyone must buy the most expensive property they could afford now? How about the fact that people are buying too many things and thus have too little savings? There’s also the fact that sales of a cup of RM15 lattes are still increasing even if everyone knows that a cup of latte a day without a slice of cheesecake is still going to be RM450 per month? Oh yeah, that’s RM5,400 per year or RM54,000 in 10 years which is enough for a 10 percent downpayment to a RM500,000 home. Looking at all those advanced countries, I think these last few reasons seem more probable. Happy hunting.
written on 8 April 2018
Next suggested article: 4.4 times the median income, so it’s seriously unaffordable. Tomorrow?