those who are intending to purchase their first prop should rejoice as this would prolly cool down the current buoyant prop mkt but to prop investors...

Ref No: 11/10/02

Embargo: For immediate release

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.

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

© Bank Negara Malaysia, 2010. All rights reserved.

Sos cili: http://www.bnm.gov.my/index.php?ch=8&pg=14&ac=2159

This post has been edited by babana: Nov 3 2010, 06:02 PM

Right move... prop should cold down... no more speculators buying houses without downpayment...

great news... thanks for sharing...

They will be a lot of properties available for you and me...

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Added on November 3, 2010, 7:34 pm

But third property here meaning, when you have first and second under your name, then 3rd one will be subjected to the 70% or property no 3 and above although you have already sold first and second house?

This post has been edited by yeowa: Nov 3 2010, 07:35 PM

Phew.... good... only third property onwards...

i do not think this will have any effect on the price..let wait and see

How does it affect the property market price? I personally think it wont affect the price. Anyone mind to explain further.

Thanks

i also feel that it will not have any effect...><

it will not affect the price, good news for those home stayers, easier to get the choice units as flippers will stay away already...

Don't think this will affect the prices a lot too. speculators will still buy using family members name to get the 90% LTV.

it will affect property wit high concentration of FLIPPERS.... no offence i think one of them is Empire City and many more....

If their family members are eligible (provided sufficient income statement) it doesn't make any different before and after. Frankly, how many members will give their name for loan?

Just some clarification. If a buyer finance his first propperty with bank 90% bank loan, but buy the second property by cash. Is he entitled to get 90% loan for the third property???

which will be applicable to the third house financing facility taken out by a borrower.
Yes.

That's what i understand from the statement as well. Thanks a lot.

Shit! if i apply loan today then 70% ? this is my 3rd applicaton... damn

does that mean if one has 10 properties paid by cash, then 11 property still 90% loan ?

yes, plus its easy to say "use family member name maa.." but then, if u use their name, so later on they cant use their names to get the 90% right?

i think this is a good move, help d genuine buyer and push the speculator and joy bidder away.

I foresee developers who sell studios recently will get hit by this. Reason is because most of the investors bought few units at one go and now they can only get 70% loan, for sure they will just cancel the booking or just buy one unit instead of a few.

This post has been edited by super911: Nov 3 2010, 09:24 PM

all i can say is "better than none". at least there will be something to at least slow down the increasing of property prices nowadays. hopefully there will be more which would benefits 1st time buyers.

This post has been edited by ccheng0085: Nov 3 2010, 09:25 PM

This is a wise move by BNM. IMO, property prices will cool down, but unlikely to drop. Those badly affected will be the recent launched projects, especially studio/soho developments (whee there are a lots of flippers)...