Contrasting statistics

ACCORDING to Bank Negara figures, the loan rejection rate for housing loans fell further last year to 23.6%.

This was lower than the average rejection rate of 26.1% between 2012 and 2015.

Hence it came as no surprise that the governor Datuk Muhammad Ibrahim expressed surprise as to why developers were complaining that sales were slow because the loan rejection rate is high. In some instances, developers say the rejection rate is up to 80%.

Nobody is able to point a figure as to why there are two contrasting figures on housing loan applications.

Bank Negara says it has numbers to prove that the approval rate is 76.4%. The developers will probably need to look into their prospective buyers and see which banks rejected the loans. Only detail analysis will be able to show why the figures are so different.

Another interesting number that has come out of Bank Negara’s annual report is the drop in people applying for loans. Loan applications dropped to 456,197 last year compared to 474,225 in 2015. The majority of the applicants, some 61%, were looking to buy properties below RM500,000.

This shows that the shift towards affordable housing is gaining traction. In fact more of such houses are expected to come into the market in the next two years as the emphasis on affordable housing continues.

There was a significant drop in the growth of borrowers with three loans or more, who are considered the speculative buyers. The growth last year was 1.4%, lower than the 3.1% in 2015.

It is much lower than the growth of 15.8% recorded in 2010. Remember, that year was the start of easy credit in the banking system due to flow of funds into emerging markets.

The number of housing loans settled within three years – another sign of speculative buying – eased to 11.9% compared to 13% in 2015.