Survey: Malaysians Want High Interest Rate for Housing Loans Lowered

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Easier to obtain approval for joint application but package not attractive.

What people want:

  • Bank loan
  • Lower interest rate
  • 90% financing 

    Representational image

 More Malaysians are now experiencing less difficulty in obtaining housing loans, but, many still remain dissatisfied, citing the high interest rate which should be lowered given the present economic challenges.

According to PropertyGuru Malaysia’s recent Consumer Sentiment Survey, 46 percent of respondents said the interest rates were too high compared to just 31 percent who felt it was acceptable.

“While more loans are being approved, especially due to more joint applications, many consumers are declining on account of the margin obtained and monthly installments to be paid.

“Banks are now approving more applications, but, at times, the package offered is not attractive to consumers,” PropertyGuru Malaysia Country Manager, Sheldon Fernandez said in a statement today.

According to PropertyGuru data, a whopping 91 percent of respondents stated they would need a bank loan to secure a home, of which, 45 percent would opt for 90 percent financing and 25 percent going for 70-80 percent.

Another 18 percent would choose 100 percent financing.

The latest results coincide with findings that the Malaysian property market has reached a more stable position with gradual, but sustainable price appreciation, compared to the steep rise in the past two to three years.

Given this scenario, Fernandez said Malaysians continue to face challenges in pursuit of home ownership even though they were willing to transact.

Obstacles still remained for purchasers, especially for first time home buyers, who were left with insufficient funds after paying their monthly installments or meeting upfront costs such as stamp duties, legal fees, and moving costs, he added.

Fernandez said a solution to offer to the first-time home owners was a special interest rate if they bought affordable properties within a specific price range in transit oriented developments.

About 43 percent of Malaysians mentioned they have used their Employees Provident Fund (EPF) savings to purchase property, either as part of the initial down-payment or to offset their principal home loan amount, a five percent increase in the sentiment this year compared to 38 percent in the second half of 2016.

“Generally speaking, dipping into one’s retirement savings to buy a property is a sign of unaffordability in the market. It could also mean that consumers are prioritising home ownership over their retirement years.

“Others may feel that returns from EPF were not that attractive, hence, the money was better invested into a home that would generate capital appreciation and also provide a roof over their heads,” said Fernandez.

Conducted half-yearly since 2009, PropertyGuru’s Consumer Sentiment Survey measures property sentiment and expectations around the property market to enrich decisions by helping consumers, property agents and developers gain a better perspective of the local property market.

The first half of 2017 survey saw 949 respondents in Malaysia and more than 3,100 respondents across Southeast Asia.