Access to house financing sustained

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

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.