Tight lending environment could continue until 2019

SETIA ALAM (March 4): Banks are not expected to loosen their lending policy in the next three years although the country's loan approval rate in 2016 was at a historical low, said Smart Financing CEO Gary Chua. (pictured)

Chua was one of the speakers at the the two-day Malaysian Annual Real Estate Convention 2017 (MAREC'17) organised by the Malaysian Institute of Estate Agents. His topic was entitled "Unlocking Top 7 Financing Secrets & Strategies And Property Market Outlook for 2017".

Bank Negara Malaysia's data showed that the approval rate for residential property loans was about 42%, while the rate for non-residential property loans was about 40% as at Oct 2016.

"In fact, the loan approval rate is at a historical low now, if you look at the past 10 years, we are at the lowest point. Moving into 2017, we are seeing a similar trend," Chua said.

He added that the situation is not expected to improve until after 2019.

"Moving forward, one should not expect the banks to loosen their lending policy in the future -- be it this year, next year or the year after, this is because Malaysia is still one of the leaner markets in the world, and the country is one of the easiest places to get loans," he noted.

In addition, Malaysia is moving towards becoming a developed country, which usually has a more stringent lending policy, he said.

"In countries such as Hong Kong, China, Taiwan, Singapore and Japan, their banks' lending policy is more stringent than ours, and we are moving towards that direction also," he said.

However, Chua pointed out that one can still obtain loans from banks with the right financing strategies.

One of the seven financing strategies that he shared was to maintain a good credit profile.

It is also very important for borrowers to know the lending criteria of each bank and apply for their loans based on those criteria, he added.

"Borrowers also need to be careful with their cheque payments as a record will be kept in the system of Biro Maklumat Cek for 12 months, if your cheques bounce back twice within two months, the records will show that and it will impact your credibility," he noted.

TheEdgeProperty.com is MAREC’17's media partner.