The housing loan application rejection rate has declined to below average, according to the Bank Negara\u2019s (BNM) Financial Stability and Payment Systems Report 2017.<\/p>\n
The report, which outlines the risks and challenges faced by the country financially, revealed the rejection rate was at 23.1% last year, which is equivalent to a quarter of all cases and below the 26.1% average recorded from 2012 until 2016.<\/p>\n
The improvement of the rates was attributed to the positive alignment between bank lending standards and borrowing behavior according to the Policy Document on Responsible Financing.<\/p>\n
Lower margins of finance were also given towards higher priced units, while its collateral value were closely monitored.<\/p>\n
Despite the soft property market, banks have been approving home financing requests made by first-time homebuyers as they made up 71% of total housing loan provided by the banks.<\/p>\n
Nevertheless, banks continue to exercise caution towards funding property purchases in less favourable locations or those of financially weak developers.<\/p>\n
Among the reasons that led to the rejection of housings were lack of income to support the debt repayment, credit history and insufficient financial documentation.<\/p>\n
Meanwhile, speculative activities in the residential market continue to be subdued, while the amount of borrowers with at least three outstanding housing loans grew by 0.9% last year, compared to 1.2% in 2016 and 15.8% in 2010 – this translated to about 3% of total housing loan borrowers.<\/p>\n
However, the amount of housing loans paid off within the last three years reduced to 9.7% last year compared to 11.8% in 2016.<\/p>\n