Households seen to drive loan growth

In an article, last Saturday Star BizWeek, it was reported that loan growth will continue due to domestic demand of household consumption.  Of all "credits", households financing accounts for 53% of those loans.  And out of this, half are residential property loans.  The report further suggests that financing for real estates will continue to grow in the year 2012, albeit, slower compared to years 2010 & 2011.  

I attached the section on real estates.  Readers may log on to the links shown below to read the entire article.

Saturday October 22, 2011

By YAP LENG KUEN

Affordable housing
Household financing facilities now account for about 55% or RM531bil of the local banking system’s loans, with residential property loans comprising close to half or RM258bil of total household loans, says Wong.

Mortgage loans continue to drive lending in the retail segment. “While there was an initial slowdown in mortgage applications following the imposition of the 70% loan-to-value (LTV) cap last November for the third and subsequent home loans, the momentum has picked up again since March this year,’’ she adds.

Banks have been targeting the mid to mid-high-end segment of the market, although repayment ability is still key in assessing mortgage applications, she notes.

Robust growth was also seen in non-residential property loans, given that these properties are not subject to the 70% LTV cap while the imposition of real property gains tax from 5% to 10% for properties disposed within two years is not likely to deter genuine buyers.

According to MARC, mortgage loans grew by 8.3% in the first eight months of the year compared with total loan growth of 8.7% for the same period. As at end of August this year, mortgage loans accounted for 26.8% of total loans in the banking sector, which was in line with the average 26.9% it accounted for over the past five years (2006-2010).

Sng sees sustained demand for medium-cost housing, especially under the My First Home Scheme (MFHS) and 1Malaysia Peoples’ Housing (PRIMA) initiatives. This is coupled with the ongoing implementation of the mass transit railway (MRT) and demand from first-time homebuyers.

However, Sng expects demand for high-end properties, both condominiums and landed properties, at selected locations to soften.

Nevertheless, growth in Alliance Bank’s mortgage lending is expected to be in the high teens, boosted by expansion in its mobile housing sales teams and enhanced loan packages.

Wahid expects housing loans and vehicle financing to grow albeit at a lower growth rate.

“The implementation of the PRIMA affordable housing projects will fill the void expected from the high-end property financing. Property loans for the middle/affordable segments should see a pick-up this year with Government initiatives such as PRIMA and MFHS, provided buying interest remains sustained and developers offer more creative and well-planned projects,’’ he says.

The recent budget announcement of an increase in ceiling price for MFHS from RM220,000 to RM400,000 with 100% loan financing for first-time buyers and stanp duty exemption will promote home ownership among middle-lower income groups.

Further boosting the property market are the Government’s plan to build 7,700 houses, at below market prices, in prime areas and the implementation of “build and sell” concept where instalments would commence after the completion of houses costing RM600,000 and belows.






















http://biz.thestar.com.my/news/story.asp?file=/2011/10/22/business/9748716&sec=business