KUALA LUMPUR (March 21) : Malaysian household debt growth slowed to 12.5% in 2011 versus 13.7% a year earlier following more stringent measures by the central bank to curb speculation in the real estate market.
Bank Negara Malaysia (BNM) said the measures implemented since 2010, had shown results as the number of borrowers with more than two outstanding housing loans moderated and registered a significantly lower growth of 2.9% in 2011versus 14.9% in 2010.
In its 2011 Financial Stability and Payment Systems report on Wednesday, it said: “The credit exposures to the household sector continue to be manageable with some emerging signs of moderation in household borrowing, particularly in the second half of 2011.
“The financial position and debt-servicing capacity of households remain sound at the aggregate level, supported by higher income and favourable employment conditions,” BNM said.
According to BNM, the latest household debt numbers as a proportion of the country’s gross domestic product translates into a ratio 76.6% compared to 75.8 % in 2011.
Loans for the purchase of residential PROPERTIES [] accounted for the single largest chunk of 45% of household house debt in 2011, it said.
BNM said while home loan growth slowed to 12.7% in 2011 from 12.8% in the preceding year, house prices had continued to rise at an annual average of 5.9%, on a quarterly basis, in the last three years. This compares with the average of 3.9% for the period of 2001 till the third quarter of 2011.
It said bulk of the loans dished out for the purchase of residential units was for those priced over RM250,000 each.
On the whole, BNM said household balance sheets generally exhibited strong financial buffers against adverse changes in asset values, interest rates and income levels. However, the central bank cautioned that borrowers with a monthly income of RM3,000 and below and living in urban centres were more vulnerable to “potential income shocks”.
This is because this segment of borrowers had substantial debt obligations with limited buffers to counter any loss of income, or price increases.
“Given the high dependence on income to sustain consumption, lower-income households, in general, are more susceptible to income shocks and to some extent, price shocks.
“Outstanding borrowings of individuals in this income group accounted for about 23% of banks’ exposures to households or 12.7% of banking system loans, with the majority of borrowers’ loan facilities concentrated in vehicle and personal financing,” BNM said.
Bank Negara Malaysia (BNM) said the measures implemented since 2010, had shown results as the number of borrowers with more than two outstanding housing loans moderated and registered a significantly lower growth of 2.9% in 2011versus 14.9% in 2010.
In its 2011 Financial Stability and Payment Systems report on Wednesday, it said: “The credit exposures to the household sector continue to be manageable with some emerging signs of moderation in household borrowing, particularly in the second half of 2011.
“The financial position and debt-servicing capacity of households remain sound at the aggregate level, supported by higher income and favourable employment conditions,” BNM said.
According to BNM, the latest household debt numbers as a proportion of the country’s gross domestic product translates into a ratio 76.6% compared to 75.8 % in 2011.
Loans for the purchase of residential PROPERTIES [] accounted for the single largest chunk of 45% of household house debt in 2011, it said.
BNM said while home loan growth slowed to 12.7% in 2011 from 12.8% in the preceding year, house prices had continued to rise at an annual average of 5.9%, on a quarterly basis, in the last three years. This compares with the average of 3.9% for the period of 2001 till the third quarter of 2011.
It said bulk of the loans dished out for the purchase of residential units was for those priced over RM250,000 each.
On the whole, BNM said household balance sheets generally exhibited strong financial buffers against adverse changes in asset values, interest rates and income levels. However, the central bank cautioned that borrowers with a monthly income of RM3,000 and below and living in urban centres were more vulnerable to “potential income shocks”.
This is because this segment of borrowers had substantial debt obligations with limited buffers to counter any loss of income, or price increases.
“Given the high dependence on income to sustain consumption, lower-income households, in general, are more susceptible to income shocks and to some extent, price shocks.
“Outstanding borrowings of individuals in this income group accounted for about 23% of banks’ exposures to households or 12.7% of banking system loans, with the majority of borrowers’ loan facilities concentrated in vehicle and personal financing,” BNM said.
