Approval rate for housing loans hits high of 73.8% in 2016

PETALING JAYA: The Association of Banks in Malaysia (ABM) said the approval rate for housing loans in 2016 is high at 73.8%.

In a press release today, the association clarified that the different statistics on housing loan rejection rates as reported by the banks and developers may be due to differing statistical approaches used by each industry.

“For banks, the approval rate in 2016 is high at 73.8%. The approval rate takes into account housing loans approved by banks and accepted by the borrowers as well as housing loans approved by banks but subsequently cancelled by the borrowers. Banks also generally do not include applications with incomplete documents when calculating the approval or rejection rate,” the statement read.

As with other loans, one of the key factors that banks will consider is the capability of the applicant to repay the loan, said ABM, adding that applicants that meet the bank’s criteria will not be rejected.

The association noted that a borrower will have a higher chance of success in his/ her application by:

* Knowing how much he/she is eligible to borrow to purchase a property, based on his/her existing income, expenses and other loan repayment commitments, by checking with the bank.

* Ensuring that he/she is not over leveraged and has the ability to prove financial capability to make monthly repayments. As a general rule, the monthly home loan instalments and other debt commitments such as hire purchase financing should not exceed 40% of gross income.

* Having a good credit record by keeping all payments up to date on existing credit facilities/ liabilities.

* Fully and accurately disclosing all material information with regard to his/her financial position when applying for a home loan.

ABM said that with a wide range of home loan products available in the market, it is crucial for customers to identify the loan features which are important to them when shopping for a loan.

“Homebuyers must also be aware of the factors that banks take into account in evaluating a housing loan application, which may include the location of the property, the applicant’s credit rating, conduct of existing loan accounts and capability to service the debt.”

For first time homebuyers, there are financing options such as the government schemes including “Skim Rumah Pertamaku” (SRP), which offer assistance in their property purchase, ABM said.

“They may also want to consider applying for projects under ‘Perbadanan PR1MA Malaysia’ which offer the opportunity for middle-income households to own a home in key urban centres. There are also rent-to-own schemes available under PR1MA.”