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NAPIC: 1H2020's residential loan approval rate stood at 34.1%, lowest in 10 years

PETALING JAYA (Sept 22): The loan approval rate for residential properties in the first half 2020 (1H2020) stood at 34.1% which is the lowest in 10 years, according to the 1H2020 Property Market Report released by the National Property Information Centre (NAPIC).

To help stimulate the soft market battered by Covid-19 and movement control order (MCO), the government has cut Overnight Policy Rate (OPR) by an accumulative 125 basis points since March 2019. Although this would lower borrowing cost, banks are becoming more cautious on lending.

NAPIC’s report, citing data from Bank Negara Malaysia, shows that the total loan application amount for the purchase of residential property in 1H2020 plunged by 24.1% y-o-y to RM96.45 billion, while total amount of approved loans decreased by 39.1% to RM 32.84 billion, which is the lowest amount in a decade.

The steeper drop in total amount of approved loans has caused the loan approval rate to decline from 42.4% in 1H2019 to 34.1% in 1H2020, the lowest level across 10 years.

For non-residential properties, the loan application amount in 1H2020 stood at RM30.1billion, 36.3% less than that of 1H2019. The total amount of approved loans fell 46.9% to RM9.93billion, resulting in a drop in loan approval rate to 33%, as compared to 39% in 1H2019. Nonetheless, the loan approval rate is slightly higher than that of 1H2018, which is at 31.5%.

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