When we look at the Non-Performing-Loan (NPL) numbers, it looks like there are very few defaulters, in percentage terms. Earlier article here. Does this mean that the banks have been too strict since only the very qualified gets their loan applications approved? Should they lower their lending criteria? Earlier ‘advice’ from a Deputy Minister here. In the US for example, the Mortgage Crisis happened within a short period of people losing confidence with the property market as soon as the number of defaulters start to rise. In Malaysia, we have negative sentiment prevailing currently and the slowdown in transactions have started since 2013. So, what could the banks do in order to also help reduce some of the current unsold property stocks?
Article in edgeprop.my here. Real Estate and Housing Developers Association (Rehda) Penang past president Datuk Jerry Chan said that banks should reveal statistics of defaulters to “justify” their “strict” rules on housing loans. He said, “Banks have become a lot stricter on giving housing loans over the years but we found people have been continuously servicing their loans as they want to keep their houses.” said Chan. He added, “We know that the number of loan defaults has not gone up over the years. As such, banks should be more receptive to the efforts of the developers and the Government to help people own homes. Banks should make it easier to obtain loans.” He shared that perhaps the banks should also look beyond the payslips or income tax of purchasers because some people are getting a ‘second job’ these days. Article in edgeprop.my here.
I think it’s also very important for banks to also reveal the statistics for successful applications and their Debt Service Ratio (DSR) perhaps? Also their salary range as well as the median property prices which these successful applicants are buying. I think the data will be interesting and this can go a long way in also educating the first-time home buyers on their monthly expenditure as well as expectations. There are many who are really over-stretching themselves just to get a property which is considered more ‘prime’ than their peers. Truth is, one solution is also for potential buyers to go for cheaper properties too in order to have higher chances of getting their loan applications approved. Happy understanding.
written on 14 Feb 2019
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