ACCORDING to data released by Bank Negara Malaysia (BNM), total loan application for purchase of property rebounded by +19.3% month-on-month (mom) to RM62.6 bil in July 2025 following a decline of -6.9% in June 2025.
“We think that the rebound in loan application in July was due to normalised loan application following school holiday in June. On yearly basis, total loan application in July 2025 was flattish, following a marginal decline of -0.5%yoy in June 2025,” said MBSB Research.
That brought the total loan application in the seven months of calendar year 2025 (7MCY25) marginally higher at RM374.4 bil.
We think that the prospect for loan application is better for the remaining of CY25 mainly due to the overnight policy rate (OPR) cut by 25 basis points on 9th July 2025.
The OPR cut is expected to improve loan affordability of property buyers and support loan application growth.
Approved loan for purchase of property jumped by +25.7% mom in July 2025 following a sharp decline of -14.7% mom in June 2025. The rebound in approved loans in July 2025 was due to higher loan application and higher loan approval ratio of 44.8% in July 2025 against approval ratio of 42.6% in June 2025.
On a yearly basis, approved loans declined by -5.1% yoy despite the marginal decline in loan application as approval ratio declined to 44.8% in July 2025 from 47.1% in July 2024.
Cumulatively, total approved loan was lower at RM161.4 bil (-1.5%yoy) in 7MCY25. Nevertheless, we think that approved loan should improve going forward due to anticipation of higher loan application.
For the upcoming Budget 2026 which will be announced in October 2025, we think that government will remain focusing on improving home ownership for first-time home buyers.
Incentives such as of stamp duty exemption and continuation of Home Ownership Campaign could be announced in Budget 2026 to improve home ownership for low to middle income group.
In this context, developers that have high exposure to affordable housing segment such as Mah Sing Group and Matrix Concepts should benefit.
Besides, we think that development of new models which is as part of 13MP housing market reform could be announced such as build-then-sell and enhanced rent-to-own scheme.
While build-then-sell model is aiming at lowering risk to buyers and reducing abandoned projects, the transformation to new model may pose financial challenge to developers with strained cash flow or high net gearing.
We think that with greater financial risk for developers under build-then-sell model as construction cost must be funded upfront, it will increase costs for developers and subsequently lowering housing supply.
Consequently, we opine that the higher market concentration among developers with stronger balance sheet and lower housing supply may lead to increase in property selling prices.
We see prospect for property sector to remain stable, backed up the healthy buying interest on property. Despite the rising residential overhang in Malaysia, we think that the residential overhang in key states remain healthy which should keep sentiment on property market in Malaysia staying positive. —Sept 12, 2025
Main image: Propertyguru
