![[Most Recent Quotes from www.11.com.my]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
20 November 2013
Despite its long-term benefits, Bank Negara Malaysia's new circular has been viewed negatively by analysts.
Aimed at making the property market sustainable, the new rules took effect last Friday and effectively placed the brakes on the developer interest-bearing scheme (DIBS) and interest capitalisation schemes (ICS).
It also required the use of the property's net selling price as the benchmark for securing bank loans.
According to Cheah King Yoong, bank analyst at Alliance Research, the measures were “more onerous” than expected. It also posed downside risks to his loan growth estimate of nine percent for the banking sector in 2014.
“Although the guidelines on the prohibition of the DIBS was not a surprise, the new rule on using the net selling price to determine the loan-to-value (LTV) ratio is a negative surprise to us,” he said.
“While it is difficult to gauge the impact on banks, the fact that this new rule applies to all property financing, including first-time home buyers, means that property buyers’ affordability will be affected, and this will lead to lower property loan growth,” he added.
He also noted that the latest policies “illustrate the sheer determination of the authorities to contain the growth of household debt.”
“These measures, together with potential rate hikes in 2014, fiscal tightening by the federal government and subsidy rationalisation next year, could further drag on loan growth in the retail segment, temporarily leading to a rise in credit costs, and dampen investor sentiment on the banking sector,” he said.
Aimed at making the property market sustainable, the new rules took effect last Friday and effectively placed the brakes on the developer interest-bearing scheme (DIBS) and interest capitalisation schemes (ICS).
It also required the use of the property's net selling price as the benchmark for securing bank loans.
According to Cheah King Yoong, bank analyst at Alliance Research, the measures were “more onerous” than expected. It also posed downside risks to his loan growth estimate of nine percent for the banking sector in 2014.
“Although the guidelines on the prohibition of the DIBS was not a surprise, the new rule on using the net selling price to determine the loan-to-value (LTV) ratio is a negative surprise to us,” he said.
“While it is difficult to gauge the impact on banks, the fact that this new rule applies to all property financing, including first-time home buyers, means that property buyers’ affordability will be affected, and this will lead to lower property loan growth,” he added.
He also noted that the latest policies “illustrate the sheer determination of the authorities to contain the growth of household debt.”
“These measures, together with potential rate hikes in 2014, fiscal tightening by the federal government and subsidy rationalisation next year, could further drag on loan growth in the retail segment, temporarily leading to a rise in credit costs, and dampen investor sentiment on the banking sector,” he said.
Nikki De Guzman, Junior Journalist
0 comments:
Post a Comment