New-home supply in Malaysia to shrink on higher loan-rejection rates.
The shift from gross income to net income as a measure of loan eligibility has left many potential housebuyers in a quandary, with loan-rejection rates reported as high as 70% in the first round. Loan eligibility varies among financial institutions; therefore applicants can seek alternatives if they are rejected by the first financial institution approached.
Market players believe the higher incidence of loan rejection is largely a result of the economic prosperity enjoyed by the nation that overheated the property market in the first place. This gave rise to the need for a series of cooling measures by Bank Negara Malaysia (BNM) over the past two years to halt the exponential rise in house prices.
Now, buyers are out there — but loans aren’t.
A major stumbling block in the sale of new property, according to a property industry survey by the Real Estate and Housing Developers Association (Rehda), is a problem with end-financing.
The association representing developers reported a 46% rejection rate for loan applications for homes in the category of RM500,000 to RM700,000. There was a 19% rejection rate for homes in the RM700,000 to RM1 mil bracket and 18% of rejections for homes priced RM1 mil to RM2.5 mil. According to Rehda, the largest loan rejections were in Johor, followed by Selangor and Penang, which corresponds with the quantum of home launches.
Source : http://www.focusmalaysia.my/ – http://goo.gl/e81DLY