Malaysian property loans set to decline

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Cautious investors are expecting to apply less property loans due to growing concerns on global economic stability and looming policy tightening.

According to a report released by ECM Libra Research, a segment of ECM Libra Financial Group, noted that it does not expect Bank Negara Malaysia (BNM) to revise its three percent overnight policy rate (OPR). However, it is possible that BNM will increase the Statutory Reserve Requirement (SRR).

It expect BNM to implement additional measures to macro-prudential lending in order to cool inflationary pressure and cut back the current loan growth momentum.

Additionally, the report said the government's implementation of affordable housing scheme is affecting the speculative demand in the housing sector.

Lending data for August revealed that month-to-month growth rate of loan applications dropped 6.7 percent to RM60.4 billion compared with RM65.3 billion recorded in July.

Although it expects business loans to increase in the long term on the back of anticipated slow down in property loans, the research house said property loans contributed 40.7 percent to the year-to-date credit expansion with working capital loans coming in at 22.9 percent.

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