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Banks: Imposition of maximum loan-to-value (LTV) ratio timely, pre-emptive

KUALA LUMPUR: The Association of Banks in Malaysia (ABM) said Bank Negara Malaysia’s (BNM) move to impose a maximum loan-to-value (LTV) ratio of 70% for the third housing financing facility taken by a borrower as “timely and pre-emptive” in nature.

ABM said on Wednesday, Nov 3 said the association and its member banks have been engaging with BNM on the issue together with various alternative measures and have provided their input and feedback. The chairman of ABM, Datuk Seri Abdul Wahid Omar, said: “We at ABM view this move as timely and pre-emptive in nature”.

Wahid, who is also president & chief executive officer of Malayan Banking Bhd, said whilst the banking sector fully supported house ownerships, banks agreed that appropriate measures should be adopted to avert unhealthy speculative activities which could lead to a property bubble.

“In my view, the application of the measure is clear and specific and the LTV ratio itself, optimal. Given that financing for 1st and 2nd housing properties will not be affected by the ruling, the move is not expected to dampen or have an adverse impact on the growth of residential property development sector as well as the banks’ house financing business.

“Affordability of homes for genuine house buyers will be preserved as banks continue to lend prudently under their respective risk management framework which is well tested and has proven to be effective,” Wahid said.

As for the Financial Capability Programme also announced by Bank Negara, he said the programme underscored the view shared by ABM that education was paramount to promote sound financial and debt management by the banking public.

Wahid said ABM woud work closely in cooperation with Agensi Kaunselling dan Pengurusan Kredit in the implementation of the programme.

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