More home loans but interest rates ‘too high’

> Survey: Malaysians have less difficulty in getting financing but still unhappy with borrowing costs

PETALING JAYA: More Malaysians are now experiencing less difficulty in obtaining home loans, but many still remain dissatisfied with interest rates.

PropertyGuru Malaysia said according to its recent Consumer Sentiment Survey, the consumers cited interest rates as too high and should be lowered given the present economic challenges faced by the rakyat.

“According to the survey, 46% of people say that interest rates are too high compared to just 31% who felt present interest rates charged on home loans are acceptable. Another 23% don’t know or prefer not to comment,” it said in a statement yesterday.

The first half of 2017 survey, saw 949 respondents from Malaysia and more than 3,100 respondents across Southeast Asia.

PropertyGuru said a whopping 91% of the respondents said they will need a bank loan to secure a home; 45% would opt for 90% financing; 25% would go for 70-80% financing; while another 18% would choose 100% financing.

The property portal said the latest results coincide with findings that the Malaysian property market has reached a more stable position with gradual, but sustainable price appreciation compared to the steep rise in the past two to three years.

Given this scenario, it said Malaysians continue to face challenges in pursuit of home ownership even though they are willing to transact.

“While more loans are being approved, especially due to more joint loan applications, many consumers are declining these loans due to the margin of loan approved and the monthly instalments to be paid,” PropertyGuru Malaysia country manager Sheldon Fernandez said.

“Banks are now approving more applications but, at times, the package offered is not attractive to consumers,” he said.

Fernandez added that perhaps one solution is to offer first-time home owners a special interest rate if they bought affordable properties within a specific price range in transit-oriented developments.

He pointed out there is a need to have a clear definition of what is an affordable property in terms of price, size, location and factoring close proximity to public transportation network.

Fernandez said this will not only promote home ownership, but also public transport ridership towards reducing traffic congestion and a more sustainable urban lifestyle.

Meanwhile, the survey said 43% of Malaysians mentioned they have used their Employee Provident Fund savings to purchase property, either for the initial downpayment or to offset principal home loan amount. This is an increase from 38% in H2 2016.

“Generally speaking, dipping into one’s retirement savings to buy a property is a sign of unaffordability in the market. It could also mean that consumers are prioritising home ownership over their retirement years. The money is better invested into a home that would generate capital appreciation and also provide a roof over their heads,” Fernandez said.