Ample of Funds for Housing Loans, says BNM

24 Mar 2017

Monetary assistance is crucial in getting new homes.

Citing statistical trends, the Malaysia’s central bank has refuted perceptions that end-financing for residential properties here are limited, reported Bernama.

According to Bank Negara Malaysia (BNM), houses costing less than RM250,000 accounted for around 56 percent of the outstanding loans as of 31 December 2016, whereas homes valued between RM250,000 and RM500,000 made up another 25 percent.

The rejection rate for mortgage applications also fell to 23.6 percent last year compared to 26.1 percent between 2012 and 2015.

These data show that there is ample financing available for qualified homebuyers, it said in its Annual Report 2016 released on Thursday (23 March).

Likewise, property developers continue to have access to funding from financial institutions.

However, the growth of loans granted for real estate activities and housing construction only increased by 11.7 percent last year versus the 18.5 percent gain in 2012 to 2014, as there were fewer property launches in 2016.

In addition, BNM pointed out that instead of the imagined lack of financing, what actually exists is an inadequate supply of affordable homes for low- and middle-income households. In fact, the shortage of affordable houses was estimated to have reached 960,000 units in 2014, but this is forecasted to rise to 1 million units by 2020.

“While there are multiple programmes by the private sector, federal and state governments to supply affordable housing, the current level of house-building is not sufficient to meet demand,”

This situation was exacerbated by the slower growth in salary relative to property prices and the trend of building more houses costing over RM250,000.

“While there were more launches during 2012-2014, the number of new affordable housing units for households earning the median income (below RM250,000) was fewer by 16,200 units per year since 2008,” it said.

“This undersupply of affordable homes is likely to worsen, going forward, given the current trends in income and demographic factors.”

To help address the lack of low-costs houses, BNM urged the government to cut the costs related to the construction of these properties. Developers should also introduce technologies to speed up the building time and lower their expenses.

On the demand side, it suggests improving the rental market to relieve some pressure on the government to provide more affordable homes.

“This should be complemented by more innovative schemes to fund the delivery of affordable houses,” added the central bank.

Image sourced from FMT


Radin Ghazali, Content Writer at PropertyGuru, edited this story. To contact her about this or other stories email


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