Ac­cess to house fi­nanc­ing sus­tained

> FSC to con­tinue mon­i­tor­ing over­sup­ply of high-end prop­er­ties; banks to re­main cau­tious in lend­ing to th­ese seg­ments

The Sun (Malaysia) - - SUNBIZ -

KUALA LUMPUR: Ac­cess to house fi­nanc­ing, par­tic­u­larly for first-time buy­ers of af­ford­able houses, is sus­tained with ap­proval rates at 73%, ac­cord­ing to the Fi­nan­cial Sta­bil­ity Com­mit­tee (FSC) of Bank Ne­gara Malaysia.

“The FSC will con­tinue to mon­i­tor the over­sup­ply in the high-end high-rise res­i­den­tial prop­erty, of­fice space and shop­ping com­plex seg­ments with banks also re­main­ing cau­tious in lend­ing to th­ese seg­ments,” it said, re­it­er­at­ing that ex­ist­ing macro­pru­den­tial mea­sures re­main ap­pro­pri­ate in manag­ing vul­ner­a­bil­i­ties from macro-fi­nan­cial link­ages.

In terms of macro-fi­nan­cial link­ages, it said risks to do­mes­tic fi­nan­cial sta­bil­ity from ex­po­sures to house­holds are low.

“The debt ser­vic­ing ca­pac­ity of house­holds re­mains in­tact amid low im­pair­ment lev­els, un­der­pinned by stronger in­come and em­ploy­ment growth. House­hold fi­nan­cial as­sets were high, and grew faster than debt as at end-De­cem­ber 2017.”

For Malaysian cor­po­ra­tions, it said ag­gre­gate lever­age in­creased in tan­dem with in­vest­ment ac­tiv­ity, as debt-at-risk trended lower amid sus­tained fi­nan­cial health and low im­pair­ment lev­els.

“The over­all credit out­look for the busi­ness sec­tor is ex­pected to im­prove given favourable economic con­di­tions, although the oil and gas and prop­erty-re­lated sec­tors still face some head­winds. Po­ten­tial vul­ner­a­bil­i­ties from ex­ter­nal bor­row­ings of Malaysian cor­po­ra­tions are con­tained with ex­po­sures largely hedged and com­pris­ing in­tra-com­pany bor­row­ings with longer ma­tu­ri­ties.”

The FSC had on its March 9 meet­ing as­sessed that do­mes­tic fi­nan­cial sta­bil­ity con­tin­ues to be pre­served and well­sup­ported by sound fi­nan­cial in­sti­tu­tions and or­derly do­mes­tic fi­nan­cial mar­kets, with the out­look for do­mes­tic fi­nan­cial sta­bil­ity in 2018 ex­pected to re­main in­tact.

It said the Malaysian banking, in­sur­ance and taka­ful sec­tors re­main re­silient, sup­ported by a high level of cap­i­tal­i­sa­tion. Fund­ing and liq­uid­ity con­di­tions con­tinue to be favourable, with the banking sys­tem’s loan-to-fund ra­tio and liq­uid­ity cov­er­age ra­tio at 84% and 132% as at end-Jan­uary 2018. Do­mes­tic fi­nan­cial in­ter­me­di­a­tion is ex­pected to re­main sup­port­ive of economic ac­tiv­ity.

Multi-year sol­vency stress tests con­ducted by the bank af­firm the strong ca­pac­ity of Malaysian banks, in­sur­ers and taka­ful op­er­a­tors to with­stand sim­u­lated macroe­co­nomic and fi­nan­cial stresses.

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