Focus View
Banks should consider cutting mortgage rates
FocusM team | 09 Mar 2018 00:30
The recent call by the Malaysian Institute of Estate Agents (MIEA) to banks to relax housing loan requirements to ensure financing is available to house buyers needs careful study.

In response, the Association of Banks in Malaysia (ABM) said its members support and provide sufficient financing for first-time buyers, within existing financing guidelines. 

Last year, ABM said housing loan approvals rates stood at 73%, of which 71% were first-time buyers. It is commendable that banks continue to take approvals seriously and maintain current financing with strict adherence to Bank Negara Malaysia (BNM) guidelines.

The property sector has been going through tough times since BNM tightened loan approval rules in 2013. From a socio-economic perspective, the central bank made the right move, and possibly helped avert a potentially damaging domestic mortgage crisis, similar to the US subprime meltdown in 2009/10.

While it is true many house buyers are facing great challenges in owning homes, the problem has nothing to do with banks’ reluctance to approve loans. The crux of the problem is properties are simply getting too expensive and beyond the reach of the average Malaysian.

Hence, the MIEA call to banks to relax loan rules is out of place and akin to barking up the wrong tree. Why not ask property players to consider reducing property prices instead? 

Banks, many of which raked in record profits last year, can help alleviate the dire situation of home buyers by reducing mortgage rates. This will go a long way in boosting home ownership, which is the dream of many Malaysians. 

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