Introduction of a Maximum Loan-To-Value Ratio for 3rd Housing Financing Facility Will Not Dampen Orderly Growth of the Property Sector, Says The Association of Banks in Malaysia

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Introduction of a Maximum Loan-To-Value Ratio for 3rd Housing Financing Facility Will Not Dampen Orderly Growth of the Property Sector, Says The Association of Banks in Malaysia

Kuala Lumpur, Wednesday, 3 November 2010:- The Association of Banks in Malaysia (ABM) welcomes the announcement made by Bank Negara Malaysia (BNM) today at the Finance Industry Conference 2010 for the imposition of a maximum loan-to-value (LTV) ratio of 70% for the 3^rd housing financing facility taken by a borrower.

ABM and its member banks have been engaging with BNM on the issue together with various alternative measures and have provided their input and feedback.

“We at ABM view this move as timely and pre-emptive in nature. Whilst the banking sector is wholly in support of house ownerships, we agree that appropriate measures should be adopted to avert unhealthy speculative activities which could lead to a property bubble,” said Dato’ Sri Abdul Wahid Omar, Chairman of ABM and also President & Chief Executive Officer of Maybank.

Dato’ Sri Wahid added, “In my view, the application of the measure is clear and specific and the LTV ratio itself, optimal. Given that financing for 1^st and 2^nd housing properties will not be affected by the ruling, the move is not expected to dampen or have an adverse impact on the growth of residential property development sector as well as the banks’ house financing business. Affordability of homes for genuine house buyers will be preserved as banks continue to lend prudently under their respective risk management framework which is well tested and has proven to be effective.”

With respect to the Financial Capability Programme also announced by BNM today, Dato’ Sri Wahid said that the Programme underscores the view shared by ABM that education is paramount in the promotion of sound financial and debt management by the banking public.

Together with the “Swipe Smart with 6E” campaign launched last week which is aimed specifically at educating credit cardholders on the use of credit cards, the Programme will no doubt serve to reinforce the principles of sound personal financial management and their importance in new prospective borrowers and young adults. ABM will work closely in cooperation with Agensi Kaunseling dan Pengurusan Kredit in the implementation of the Programme.

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