Bank Negara defends tighter housing loan regulations

KUALA LUMPUR, March 22 — Strict housing loan requirements are needed to ensure individuals do not borrow beyond their means, a Bank Negara Malaysia (BNM) assistant governor said today.

Dr Sukhdave Singh said while easy loan approvals may give a boost to economic activity in the short term, “there will be a price to pay in the long term that... will be borne by the whole economy”.

“Credit guidelines are not intended to deny loans to genuine borrowers with genuine needs and who can afford to repay,” he said during an economic forum at Sime Darby Convention Centre here.

Sukhdave was responding to a delegate who claimed the central bank’s tightening of housing loan rules two years ago had made it difficult to secure loans, leading to a drop in sales for developers.

The forum, held in conjunction with the release of BNM’s annual report yesterday, was organised by the Malaysian Economic Association (MEA) and Universiti Malaya (UM).

In November 2010, BNM announced a maximum loan-to-value ratio of 70 per cent for third housing loans to curb excessive investment and speculative activity in the residential property market.

The central bank said the measure would help ensure housing remained affordable and promote home ownership among Malaysians, which was “an important national agenda”.

Financing for the purchase of first and second homes were not affected by the ruling.



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