‘Home loan approval at 73.8pc last year’

KUALA LUMPUR: The Association of Banks in Malaysia has clarifed that loan applicants that meet a bank’s criteria will not be rejected and that the approval rate of housing loans last year was at 73.8 per cent, in response to the different statistics on housing loan rejection rates raised by banks and developers.

“Such differences may be due to differing statistical approaches used by each industry. The approval rate takes into account housing loans approved by banks and accepted by the borrowers, as well as housing loans approved by banks but cancelled by borrowers.

“Banks also generally do not include applications with incomplete documents when calculating the approval/rejection rate. As with other loans, one of the key factors that banks would consider is the capability of the applicant to repay the loan,” it said in a statement.

The association said a borrower would have a higher chance of success in his application by checking with the bank to see how much he is eligible to borrow to purchase a property, based on his existing income, expenses and other loan repayment commitments.

“He could also ensure that he is not over-leveraged and has the ability to prove financial capability to make monthly repayments. As a general rule, monthly home loan installments and other debt commitments, such as hire purchase financing, should not exceed 40 per cent of the applicant’s gross income,” it said.

Other factors include having a good credit record by keeping all payments up to date on existing credit facilities or liabilities, as well as ful and accurate disclosure of all material information with regard to his financial position when applying for a home loan.

With a wide range of home loan products available in the market, the association said it was crucial that when customers shop around for a loan, they must identify the loan features that are important to them.

“Home buyers must be aware of the factors that banks take into account in evaluating a housing loan application, which may include the location of the property, the applicant’s credit rating, conduct of existing loan accounts and capability to service the debt,” it said.

Members of the public with enquiries or complaints relating to housing loan matters can contact the association via its ABMConnect hotline at 1-300-88-9980, or via email at eABMConnect by logging on to its website, www.abm.org.my.