Hi there.
Bank Negara Malaysia (BNM) has just announced the implementation of a maximum loan-to-value (LTV) ratio of 70%, which will be applicable to the third house financing facility taken out by a borrower. 

I personally view this as a good measure to curb excessive speculation on property prices as one needs to come up with a higher downpayment of 30% from the current minimum of 10% to own the third and subsequent home. Of course, for the cash rich, the new ruling does not affect them.  

BNM Press Statements on Measures in Promoting a Stable and Sustainable Property Market and Sound Financial and Debt Management of Households 

Bank Negara Malaysia wishes to announce with immediate effect the implementation of a maximum loan-to-value (LTV) ratio of 70%, which will be applicable to the third house financing facility taken out by a borrower.  Financing facilities for purchase of the first and second homes are not affected and borrowers will continue to be able to obtain financing for these purchases at the present prevailing LTV level applied by individual banks based on their internal credit policies. The measure aims to support a stable and sustainable property market, and promote the continued affordability of homes for the general public. 

At the national level, residential property prices have increased steadily in tandem with economic development and the rise in income levels.  This aggregate growth trend remains largely manageable and has not deviated from the long term trend in residential property prices.  In the more recent period, however, specific locations, particularly in and around urban centres, have experienced faster growth, both in the number of transactions and in house prices. This is further supported by an increase in financing provided for multiple unit purchases by a single borrower, suggesting increasing investment activity that is of a speculative nature.

The targeted implementation of the LTV ratio is expected to moderate the excessive investment and speculative activity in the residential property market which has resulted in higher than average price increases in such locations. This has also led to increases in house prices in surrounding locations, thus contributing to the declining overall affordability of homes for genuine house buyers.  This measure therefore remains supportive of the objective of encouraging home ownership among Malaysians which continues to be an important national agenda. 

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Introduction of the Financial Capability Programme

As part of the continuous efforts to raise the level of financial literacy and to promote  sound financial and debt management by Malaysians, Bank Negara Malaysia also wishes to announce the introduction of the Financial Capability Programme. This Programme will be offered by Agensi Kaunseling dan Pengurusan Kredit (AKPK) through its establishments nationwide and will commence from January 2011. The Programme is aimed at equipping individuals with important knowledge for responsible financial decisions by gaining practical understanding and skills in money and debt management. This in turn will contribute towards preserving the sound financial positions of households and ensure that debt accumulation is commensurate with household affordability, including their ability to absorb interest rate adjustments and potential volatility to income and expense levels. Individuals particularly new prospective borrowers and young adults are strongly encouraged to participate in this specially designed programme. The details of the implementation of the Financial Capability Programme will be announced later in December this year.


Bank Negara Malaysia
3 November 2010

Source : BNM website 

You may want to read my earlier post
1. High Cost of Materials and Land Value Blamed for City’s Expensive Properties
2. Property Prices in Kota Kinabalu
3. Newly Launched Project. 30% Reserved / 5% Discount for Bumiputera!

Image source : shanghaiist

I'm looking forward to see The Monkey King movie in 3D to be released in 2012.

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If you are planning to buy property, better do it fast before the mortgage / housing loan rate increases.

The Star Online reported that new home buyers are expected to make higher payments for their loans with some banks increasing their mortgage rates early this month.

Some banks have even scrapped the moving-cost element – legal fees, stamp duties and other disbursement fees for loan documentation by the banks – from their home-loan offerings. It is learnt that existing home loans would still be maintained at previous rates depending on the terms and conditions of the contract.

Read the full report ...
Mortgage rates start to climb
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Some banks have raised their rates to BLR minus 1.8%

PETALING JAYA: New home buyers are expected to make higher payments for their loans with some banks increasing their mortgage rates early this month.

A check on the websites of some banks and information collected from customer service consultants at various banks showed lenders like Maybank, Public Bank, Standard Chartered Bank, Alliance Bank and EON Bank had revised upward their mortgage rates.

Some have even scrapped the moving-cost element – legal fees, stamp duties and other disbursement fees for loan documentation by the banks – from their home-loan offerings. It is learnt that existing home loans would still be maintained at previous rates depending on the terms and conditions of the contract.

Some analysts contacted by StarBiz were caught offguard and were not even aware of the new rates.

Others attributed the move to the current thin margins of banks owing to the low base lending rates (BLR) now.

Malaysian Rating Corp Bhd vice-president and head of financial institution ratings, Anandakumar Jegarasasingam, told StarBiz that one possible reason for the revised rates by the banks was to boost profitability.

“Loan growth for the commercial banking sector has been subdue during the first nine months at an annualised rate of 6.9%, compared to the growth rate of 13.4% in 2008.

“However, deposits have been growing at a faster annualised rate of 20.5% during the same period. This invariably exerts pressure on the banks’ interest margins and eventually profitability,” he said.

A banking analyst with a local research house concurred that the reason banks were increasing mortgage rates was due to thin margins.

“With the price war for mortgage products, it was taking the banks at least three years to break even. That’s why they have the five-year lock-in period in order to reap some profit,” she said.

Malayan Banking Bhd president and chief executive officer Datuk Seri Abdul Wahid Omar said the bank had already revised its mortgage loan because he said the current rate of mortgage loan in the country was too low.

“We are revising our mortgage rates accordingly. If we increase the rate, we may reduce the rates for other loans such as SME loans,” he said yesterday after the 6th Annual Kuala Lumpur Islamic Finance Forum.

He said Malaysia currently had one of the lowest rates in and around the region.

“We can’t speak for other banks but from our own perspective, there was a time when we were looking at BLR minus 2.2%. We adjust based on competition.

“If we are able to get sufficient number of mortgages at a slightly higher pricing, obviously that’s something which we would look at,” Wahid said.

In the current financial year, Maybank recorded a 7% growth in mortgage loans.

EON Bank Bhd group chief executive officer Michael Lor also said that housing loan rates “have started to creep up slightly and this was unavoidable.”

He said as banks began to move into risk-based pricing as well as the implementation of the FRS 139 framework, they would begin to measure the risk and funding cost of their products.

“Banks are becoming more cautious about how they fund their housing loans and the potential risk-reward returns,” Lor said.

The above banks have revised their rates to BLR minus 1.8% from BLR minus 2%–2.3%.

A mortgage consultant at Standard Chartered Bank Malaysia said the bank revised the rates early this month and expected others to do so in the coming weeks. Existing home-loan customers, the consultant said, would still enjoy the old rates subject to their contracts.

According to one of the mortgage consultants at Alliance Bank, the rates had been revised (BLR minus 1.8%) effective Monday.

TA Research economist Patricia Oh views the rise in mortgage rates to the expected increase in the overnight policy rate (OPR) by the second quarter of next year.

She said the export market had shown signs of an uptick although the current economic figures were still at contraction levels.

Oh added that the increased rates would be detrimental to the housing industry as it would discourage customers from owning homes.

MARC’s Anandakumar said the move to raise rates was not without its risks as a “significant re-pricing” may eventually increase mortgage defaults and discourage potential loan applicants.

Unless the banks tread the line carefully, this strategy could possibly backfire as well, he noted.

Meanwhile, HSBC Bank Malaysia Bhd said it was not aware of a potential increase in the average lending rate.

“I’m not aware of that,” deputy chairman and chief executive officer Irene Dorner said at a press conference before a seminar on Budget 2010 organised by the Malaysian International Chamber of Commerce and Industry yesterday.

Dorner declined to comment further, saying only that the bank’s non-performing loan (NPL) rate was at a manageable state.

“We’ve been very pleasantly surprised with our NPL rate which has held very steady and our growth rate has been respectable given what’s been happening in the economy,” she said.

A spokesperson for another foreign bank said its mortgage rates remained unchanged. “Our customers have been calling us up to see if there have been changes in the rates and we have advised them that there is none at the moment.

“It’s business as usual; we just need to wait and see at this point,’’ the spokesperson added.

Source : The Star Online, 04112009

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Own your Dream Home with an attractive financing packages from RHB Islamic Bank. For Residential Properties under the Equity Home Financing-i (Diminishing Musharakah).


With Free Acquisition Cost (FAC) ~ Completed & Under construction properties

• RM100K - RM300K ~ IBR - 1.90% p.a. throughout financing tenure
• Above RM300K ~ IBR - 2.00% p.a. throughout financing tenure

With Non FAC ~ Completed & Under construction properties

• Up to RM300K ~ IBR - 2.10% p.a. throughout financing tenure
• Above RM300K ~ IBR - 2.20% p.a. throughout financing tenure

Current IBR rate : 5.55%
For more info, call 082 - 276 118 (for Sabah & Sarawak) or visit www.rhbislamicbank.com.my

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You are in need of some extra cash for your child's education, or maybe you did not get the salary increment or bonuses that you have been expecting for months and you have overspent on things that you could not afford in the first place, or other reasons only known to you.

If you are in this scenario, what would you do?

Well there is an option for you. If you already own a home, you can choose to refinance it to get additional funds. You can refinance your home loan with Maybank and enjoy savings with attractive refinancing interest rates of as low as BLR - 1.70% for Zero Entry Cost loans and BLR - 1.90% for non Zero Entry Cost loans.

What is good about Maybank is that it offers higher loan eligibility of up to 40% of your salary, compared to the norm of 1/3.


Note : At the moment Maybank's Base Lending Rate (BLR) is at 5.55%

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So, after months of searching high and low you finally found your dream home, huh! If you have idle cash, maybe you can just pay off the home without getting a mortgage / home loan. But if you can afford only to pay the down payment, the next step in owning your home is to search for the best home loan package in town.

For a limited period, ING Insurance is offering a fixed interest rate home loan up to 30 years! The margin of financing is also up to 90%.
There are two packages being offered;

• Package 1 ~ 4.85% p.a. for Non Zero Entry Cost
• Package 2 ~ 4.99% pa.a for Zero Entry Cost

Below are the so called benefits of opting for an ING Fixed Rate Home Loan

Image source : ING Insurance

However, the 4.99% Zero Entry Cost is only applicable for loan amount of at least RM200K with a minimum property value of RM300K :(

Interested? Call 1-800-88-0303 or visit ING Insurance

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