Ratio of housing loan applications to approvals rose in 2016

PETALING JAYA (April 18): The number of loan applications for residential property purchases totalled 168,154.77 in 2016 with 87,550.87 of them having been approved. This translates to a loan applications to loan approvals ratio of 52.1%.

The figure was higher than the 50.2% recorded in 2015 but lower than the 52.9% ratio in 2014. The figures were revealed in the the National Property Information Centre’s (Napic) Malaysian Property Market Report 2016, citing Bank Negara Malaysia.

Of note was the number of housing loan applications which was significantly down by 18.4% from the 206,031.79 applications in 2015. The number of loan approvals also decreased by 15.3% from 103,412.12 approvals a year earlier.

The report stated that measures to curb speculation in the market taken by Bank Negara, including the implementation of a loan-to-value ratio of 70% effective November 2010 as well as the prudent and responsible lending guidelines issued in November 2011, have shown its impact on the property market.

On the other hand, the loan applications to loan approvals ratio for non-residential property showed minimal decline in 2016 to 41.2%, from 42.2% and 46.6% in 2015 and 2014, respectively.

The number of loan applications for the purchase of non-residential property had also declined 12.1% from 90,983.18 to 79,937.74, of which 32,908.16 were approved, a decrease of 14.3% from 38,408.3 in 2015.

According to the report, although the loan approvals and loan applications ratio for non-residential property remained in the 40% to 50% bracket, the total loan amount in actual ringgit had shrunk significantly over the last five years.

With both the Malaysian Institute of Economic Research’s (MIER) Consumer Sentiments Index (CSI) and Business Condition Index (BCI) remaining below the threshold level as at 4Q2016 as insecurity on income, employment and financial outlook as well as rising prices enfold households’ sentiment, the cautionary trend in both indicators are reflected with the moderating market activity in the commercial subsector, down by 25.3% in transaction volume although value of transactions recorded an increase of 36.1%.

Residential property

Non-residential property

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