3 Tighter Rules for Property Sector? (Sept 2013)

Prior to Budget 2014 (to be tabled next month), speculation has rift up on a few proposal to tighten the rules, especially on property sector. Following the outcry from public stating the alarming high property prices, measure should be taken to tackle the issue before bubble was formed.

The Bubbling Biz...

Among the measures being proposed were:

1. Non-other than Real Property Gain Tax (RPGT)
   
   
   
   
2. Higher Stamp Duty:
   ~ 5% of purchase price for 3rd property
   ~ 7.5% for 4th property
   ~ 10% for 5th property onward
   
   
3. Loan-to-Value ratio reduce to 60% for 3rd property onward
   
   

While the above info need to be ascertained further, some banks already implemented their in-house ruling. What's that? It was to limit the maximum term for refinancing of property to 10 years. Yes. Sooner or later, all of the banks will follow.

* Please note that the above 3 rules need to be ascertained further. Stay tune!

A Guide To Home Loan Refinancing

For those who have never been exposed to the concept of “refinancing”, home loan refinancing may seem like a baffling notion.  After all, what good could possibly come from getting a new home loan… just to pay off your old one? Wouldn't you just go back to square one after the whole process? These could be some of the questions you’re asking yourselves, and understandably so.

In reality, home loan refinancing is a widely-adopted practice with many potential benefits. Home buyers far and wide undertake it in order to lower the interest they’re paying on their home loans, reduce their monthly loan repayment amounts, and generally alter their loan terms to better suit their financial needs.  In fact, some even refinance to free up cash riding on the inherent values of their properties!

Want to refinance your home loan in Malaysia?
Click here to compare different rates by different banks.Courtesy of: iMoney.my

Latest BNM measures to Curb Excessive Household Debt (July 2013)

Hot from oven. Bank Negara Malaysia (BNM) today announce some measures to address the alarming household debt among Malaysians. As reported, household debts have continued to increase at a strong pace, averaging at an annual rate of 12% over past 5 years. While this has been supported by positive income and employment conditions, in the more recent period, there has been a growing trend in the offering of financial products that are not in the long-term interest of consumers.

What does this mean?

This includes extended financing tenures of up to 45 years for house financing and 25 years for personal financing!!! Wow... Is it too long the tenure? While this may reduce the monthly repayments, in the long run, this increase the overall debt burden of households. If we don't stop this kind of practice, it will encourage excessive debt accumulation by households and increase the vulnerability of this sector.

Hence, BNM has to take actions...

The implementation of a set of measures aimed at avoiding excessive household indebtedness and to reinforce responsible lending practices by key credit providers. These measures, which take effect immediately, complements the earlier measures introduced since 2010 to promote a sound and sustainable household sector.

What are the measures?

1. Maximum tenure of 10 years for financing extended for personal use;
2. Maximum tenure of 35 years for financing granted for the purchase of residential and non-residential properties;
3. Prohibition on the offering of pre-approved personal financing products.

Who will be affected the most?

For sure, borrowers (excessive one) will be short-handed. However, those good quality borrowers will not be affected. Meanwhile, the hands of financial institutions once again being tighten further. It will definitely impact the loans growth, but with a more quality growth. Property sector will face some minimal impacts, given most of the loan approved is within 35 years of financing.

For Finance Malaysia, this is good news for our country's financial sector. Excessive household debts, coupled with poor quality loans, will endangers the financial system. Worth to highlight here is the pre-approved loan is being banned now. Long time ago, Finance Malaysia is very uncomfortable with such offerings, with the intention to "indulge" bank clients to borrow. Now, we are relieve. Do you agree?

A Malaysian Guide to Home Buying Fees & Charges

Like any other country, buying a house and taking a home loan / mortgage in Malaysia involve legal fees & charges - which many people fail to take into consideration especially when they’re buying a property for the very first time.

So to all Malaysians buying your dream houses right now, allow iMoney to show you ALL the fees and charges involved when you buy a house or apply for a home loan.

Consolidating Credit Card Debt: 2 Easy Methods in Malaysia

Credit cards have become a part of life in Malaysia. But as much as they make life a lot more convenient; credit cards can also lead to an unmanageable amount of debt. In some cases, credit cards have even led to bankruptcies.

If you have a credit card debt that seems to be spiralling of control, it may be the right time to consider debt consolidation. In Malaysia, there are two common debt consolidation methods that are highly workable.

1) Credit Card Balance Transfer

Credit Card Balance Transfers involve the transferring of money that you owe on your current credit card account to a new credit card.

Balance transfers offer a number of different benefits, including lower interest rate and the ability to simplify your credit card debt payment process. 

How Credit Card Balance Transfers Can Work for Debt Consolidation:

●     If you have accumulated a significant amount of credit card debt, there is a good chance you are currently being charged the maximum interest rate. Based on the tiered interest rate structure adopted by banks in Malaysia, this maximum rate is generally 17.5% p.a.

●     If you are paying the maximum interest rate, you are probably finding it quite difficult to keep up with your credit card debts. High interest rates can cause your credit card balance to rise quickly. For example, if the amount you owe on your credit cards is RM10,000, you are essentially adding RM146 in interest to your debt each month.

●     A credit card balance transfer could give you a break from paying high interest. In some cases, you'll find balance transfer programmes that offer zero interest rate, at least for the first year or so. By taking advantage of one of these offers, you will have a better chance of paying your debt off.

●     Banks often charge a once-off fee of 3% when transferring a credit card balance. However, in the long run you will still end up paying less, due to the lower interest rate.

Example of How Much You Could Save:

Credit card average maximum interest rate = 17.5%

Lowest known interest rate for balance transfer (for a limited time) = 0%

Amount you could potentially save on interest (for a limited time) = 17.5%

2) Personal Loan

The concept of taking out a personal loan in order to pay off credit card debts might sound a little unusual. However, if you take a strategic approach by taking advantage of interest rate differences between personal loans and credit cards, this method can actually work quite well.

How Personal Loans Can Work for Debt Consolidation:

●     If you have accumulated a significant amount of credit card debt, there is a good chance you are currently being charged the maximum interest rate. Based on the tiered interest rate structure adopted by banks in Malaysia, this maximum rate is generally 17.5% p.a.

●     The interest rates on many personal loans are far lower than credit card maximum interest rates. For example, some personal loan interest rates in 2013 can be 9.88% p.a. or less, depending on your loan amount and term. If you are a government servant, the rate dives even lower.

●     If you take up a personal loan with significantly lower interest than a credit card’s, you could technically be paying much less over the long run. The savings you’re getting from your interest could even help offset the charges and fees associated with the application for a personal loan.

Example of How Much You Could Save:

Credit card average maximum interest rate = 17.5%

Known interest rate on a personal loan = 9.88%

Amount you could potentially save on interest = 7.62%

This article is brought to you by iMoney.my - the first website in Malaysia comparing credit cards, loans and mortgages - free of charge and independently.

Should Government Abolish PTPTN Loans?

Once again, PTPTN (Malaysia National Higher Education Loan) came to the limelight lately with the wrong reasons. In conjunction with this, Finance Malaysia did a survey on Facebook Page asking our fans "Should Government Abolish PTPTN Loans?", and guess the answer given by majority of them? NO.

Emmm... What does this mean? It's pretty clear that majority of us thinks that PTPTN should be continue for the following reasons:

1. There is no FREE lunch in this world
2. Borrowers should repay what he borrows
3. The scheme did already help many financially distressed students pursuing tertiary education

Thanks for your participation in the survey. Yet, many readers keep asking Finance Malaysia, our view on this matter. Before answering you, we also highlighted that this blog is of freedom of speech, we're not political driven blog, and we tend to be political-neutral in writing. Below is our view on this issue:

1. We agreed that there is no free lunch, especially in Malaysia. We should change our mentality that Government owe us this and that things. We must put in our own efforts to make things happen, and Government's role is to facilitate the process to become easier and smoother. This is why PTPTN loan was offered at the beginning.
   
   
2. Regarding the interest rate charged, it's a mere 3% only. Does it really sky high? Definitely not. Why PTPTN charged 3%? This was because our inflation rate is around that figure. If you take last year inflation rate of 3.5% into calculation, PTPTN are making losses actually, although we repay back with 3% interest rate.
   
   
3. Without interest, anyone of us who qualify to go into varsities will take PTPTN loan, whether he/she is serious in his/her study or not. Why not borrow the money to spend, instead of study, if given free?
   
   
4. Without interest, what is the incentive for student to repay back the borrow amount as soon as possible? Without interest, I will be the one who use whatever money I have now to invest, do business, buy gadgets... last is PTPTN. Agree?
   
   
5. We believe this is one of the agenda purposely created by certain political parties to fish young voters, saying that they will abolish and cleared their outstanding PTPTN loan once they formed the new Government. (Please be neutral on this matter, then only think)
   
   
6. By writing-off the outstanding PTPTN loans amounting to billions of ringgit, Malaysia sure will went into financially distressed level. Then, all of the subsidies will be removed, public sector salary will be cut, all of us will protest because of this. Do you really want this to happen?
   
   

Anyway, this is one of the interesting preview running up to the anticipated general election. Finance Malaysia hopes that political parties from both sides should focus on things that really can benefiting the country. What's the point to form a new Government that will go into bankruptcy?

Before ending this posts, we must highlighted here that Government must clear the doubts by sorting it out fast. If not, many borrowers will wait and stop repayment in anticipating that Government will abolish it soon.

Another point was we lauded PTPTN's intention to reward those prompt and disciplined borrowers with a reduced 1% interest rate. However, why not PTPTN automatically reducing it without much hassle for borrowers to appeal? Now, borrowers must request > wait for revised terms and conditions agreement > print and sign > guarantors signatures > employers details > auto-deductions from salary > return back to PTPTN. Since these are eligible good paymasters, why not treati them automatically?

Is it Viable for EPF to support Subprime Loan? (Feb2012)

In 2008, we have seen the catastrophic effect from the subprime mortgage loan in US. Even now, US is still struggling to fully recover from their worst financial crisis since Great Depression. The problems doesn't build in one day, in fact, it took years to snowball the problem. And, yet Malaysia seems like wanting to catch up with them by supporting the subprime loan. But, the unique part of our version is "using EPF monies"?

When news first broke out last month that EPF would be channelling RM1.5bil for a special public housing scheme, alarm bells sounded off for many contributors. Maybe EPF already knew the result for last year performance, it announced later that contributors are getting a decade-high dividend rate of 6%. Salute to EPF. Since EPF are doing so good even without the said "loan", then, why EPF have to take the risk to loan out to this scheme?

Afterthat, EPF published a statement claiming that the money is loaned to the Government, not to individuals. All the proceeds will go through a special purpose vehicle of Federal Territories Foundation (SPV FT Foundation) where terms and conditions are set.

YOU must be kidding, very obvious the end borrower was individuals, not Government. Where does the risk comes from? Ultimately, the individual borrowers are the one who determine the survival of the scheme.

What EPF gets?

For us, the most important detail that's available is 5.5% profit. The rest, it's very surface only without much details, such as the process of borrowers selections, criteria for loan application, and a lot of what if... Transparency is not there either.

No worry, Government can GUARANTEE the scheme mah!!! Yet, another question comes in. How does Government guaratee it? If something goes wrong to EPF monies, Government will use its money to compensate EPF?

Wait... Doesn't Government money belong to us too?

Unbelievable 1Malaysia Amanah Rakyat Scheme?

Did you watch TV news just now? There is a good news for Malaysian who are looking for higher saving rate for their monies. Yes. I am talking about the fresh from oven 1Malaysia Amanah Rakyat scheme. The scheme was launched by Prime Minister, which aimed at helping those with a monthly household income of RM3,000 and below.

Unlike the previous series, the new scheme was a hybrid of a unit trust investment and loan product, capable of generating a consistent cash flow or monthly income. It will be made available from Jan 30. But, the best part is it comes with a Guaranteed return. Unbelievable?

The limit is RM5,000 and it can be bought through savings or investment loans from selected financial institutions, such as Maybank, CIMB, RHB and BSN. Investors would get a guaranteed RM134 monthly and for those who borrow, they only need to pay RM84 a month and still get RM50 in profit.

Too Good to be TRUE?

Let's us calculate the return on investment. If investors fork out RM5,000 themselves to invest, the return would be RM1,608 per annum (RM134 x 12 months) and was equivalent to 32%. You don't have to calculate again. It's 32%, some more guaranteed.

Well, how about by borrowing the RM5,000 investment capital? If you borrow to invest, based on the RM50 net profit per month, it works out to be RM600 profit per year or equivalent to 12% return. Still consider very good. Nope, it was infinite return though because basically you pay nothing up-front to make 12% return, right?

Comparing to Fixed Deposit rate of only 3.25% per annum currently, 32% is 10 times that figure. Example, if you put your money into the new scheme, it was equivalent to putting your money into 12months FD for 10 years!!!

How did PNB guarantee?

Frankly speaking, Finance Malaysia really do not know. We're cracking our head hard now, and yet still do not have any clue. I think only PNB and Government know. Maybe, this is just another way of dishing out money to the hand of Rakyat. The special part is Government giving out beautifully this time indirectly (but, it still very obvious for us).

Property prices to Come Down after BNM's latest guidelines? (Nov 2011)

Like it or not, Bank Negara Malaysia announced that effective 1 Jan 2012, financial institutions must make appropriate enquiries into a prospective borrower's income after statutory eductions for tax and EPF, and consider all debt obligations, in assessing affordability.

Aimed at promoting prudent, responsible and transparent retail financing practices, the new guidelines require financial institutions to make assessments of a borrower's ability to afford financing facilities based on a prudent debt service ratio as inputs to their credit decisions.

On top of that, a new guideline was stipulated that the maximum tenure for vehicle financing should not exceed 9 years, with immediate effect (18 November 2011). Right now, there are only 2 banks which offers vehicle financing up to 11 years, and less than 2% of car buyers now opted for tenures beyond 9 years. The changes was neglect-able.

Are you an Informed Borrower?

The guidelines additionally hope to ensure that consumers are treated fairly in the sales, marketing and administration of financing facilities. As such, financial institutions are required to provide consumers with specific information on the following:

• total repayment amount
• total interest cost as well
• impact of an increase in the financing rate

The BIGgest Impact will be on Property sector?

Since that the banks are required to assess the affordability of borrowers based on net income, many people may not have the capital needed to pay for down payment. Although automobile industry will be affected, the biggest victim will be on property sector. This is because property purchasing needs more capital outlay.

On top of that, the value of property went up so high currently where the market value does not match the seller's asking price. To meet the short-fall, buyers are forced to fill-in with cash. This had already slowing down property prices lately. But, after the new guideline, would it be worst? Definitely.

The numbers of affordable buyers will became lesser. Hence, demand for property will be softened. What if supply more than demand? Simple economic theory told us that prices have to come down in order to strike a balance. I think this is true and will materialize next year.

Oh my beloved PSD Graduates, where are You?

When writing this article, I am proud to say that I am a local graduate working locally and repaying my PTPTN loan monthly. Who said that graduates can't perform as best as others? Do we necessary needed to obtain hundreds of thousands of loans to study oversea? If I can survive here, why can't you?

Of course, I can't deny that some professional courses offered here are not competitive enough. That's why many professionals opt for oversea universities. By graduating oversea as a doctor or lawyer or engineer, it definitely costs you a hole in the pocket. Please bare in mind, it is not your pocket, but your parents' pocket. This is when Public Service Department (PSD) scholarship comes into the picture to fulfill Malaysia's dream to groom our talents, and your parents' dream too.

Why don't you come back?

Then, this question popped up. Yesterday, it was reported that 65% of PSD scholars did not return home. Surprised? And, most of them is doctor. Although there are thousands of reasons for them to not returning, I would like to stress one thing only here - responsibility. Yes, whatever you take is whatever you give. PSD gave you so much money, supporting your dream to be a successful Malaysians, realizing your parents' dream, is that the way you return the favors of Malaysia Government?

Practicing what you learn from the 1st day?

Even when we were young studying in Kindergarten, we taught to be a responsible person. And, you're professional now. Do you practiced what you have learn all these years? If you do not like the Malaysia's way, why you took up the PSD scholarship in the first place? Instead, you can take your parents hard earned money. Then, you can disappear yourself, and no one will bother about it.

However, if you took PSD scholarship and do not return back to service, this is considered as "investment loss" of Government. This is public money. Meaning every Malaysian can blame you. Even if you succeed in life, you're spiritually failed. Please be responsible to yourself, your family, and your country. Respond now!

What is Statutory Reserve Requirement (SRR)?

Everyone is buzzing about SRR lately, since Bank Negara Malaysia's statement which stated its intention to raise SRR in the near future. Actually, what is SRR? And, what is the effect of higher SRR imposed? Why BNM using SRR right now? Finance Malaysia hopes to clear everyone's doubt and would appreciate if you can share this out.

What is SRR?

Statury Reserve Requirement is a monetary policy instrument available to Bank Negara Malaysia (BNM) for the purposes of liquidity management. Effectively, banking institutions namely commercial banks, merchant/investment banks and Islamic banks are required to maintain balances in their Statutory Reserve Accounts (SRA) equivalent to a certain proportion of their eligible liabilities (EL), this proportion being the SRR rate.

Why BNM uses the SRR as its "tool"?

Since SRR is available to BNM to manage liquidity and hence credit creation in the banking system, it was used to withdraw or inject liquidity when the excess or lack of liquidity in the banking system is perceived to be large and long-term in nature. Currently, BNM believes that our banking system is lack of liquidity, thus it may raised the SRR to "store" more money in banks.

Effective 1 March 2009, the SRR rate for banking institutions is 1% of EL. As of 1st September 2007, the EL base consists of ringgit denominated deposits and non-deposit liabilities, net of interbank assets and placements with BNM.

Previous adjustments to the SRR rate

What is the effect of higher SRR?

As explained above, higher SRR means that banks in Malaysia will have to keep more money as their reserve. This translates into lower loans growth for banks. Normally, banks wiould imposed stricter loan approvals for borrowers, because less funds are available for lending.

Normally, higher SRR translates into lower profit growth for banks. Banking stocks are the hardest hit. But, raising the SRR from a record low of 1% is unlikely to have any significant impact on credit growth. Finance Malaysia see this as an opportunity to accumulates banking stocks if they are battered down because of higher SRR.

Source: OSK Research

Source: OSK Research

Source: OSK Research

Source: OSK Research

Source: Bank Negara Malaysia

Related Posts:

Motor Insurance to cost more starting 2012?

Extractions from BNM monetary policy statement (Jan 2011)

How BNM OPR hiking affecting the market? (March 2010)

My First Home Scheme: Home of Trouble Ahead?

Once again, to address the affordability issues of properties, MyFirst Home Scheme (My1st) was launched by government on 8th March 2011. Thanks for addressing the problem faced by young Malaysians working adults. But, does it really worth to even think about the scheme?

Of course, owning a house at young age is a good start to family planning. In fact, we're living in a society where buying a new house tights closely to starting a family. But, this is not necessary a MUST to everyone of us. We must do proper planning before committing for such a long-term loan with such huge amount. Buying a house is not buying an iPad or iPhone.

Only apartments are likely with less than RM220,000 price tags in Klang Valley now

Highlights of My First Home Scheme...

• For those earning less than RM3,000 monthly
• Working in private sector
• Confirmed employees with a minimum of 6 months in the job
• Joint applications are allowed (both in private sector and are family members)
• 100% loan financing for first house purchasing
• Eligible houses: Between RM100,000 and RM220,000
• Both under construction or completed properties
• Repayment period of up to 30 years
• Monthly loan repayment must be < 1/3 of applicants' monthly gross income
• 25 participating banks / financial institutions

Burning questions to participating banks...

1. Does the participating banks offering the same rate as currently practiced?
2. Does the banks really allocate sufficient funds for such loan?
3. Would the bank perform stricter credit checks since many borrowers are young and categorized as higher risk group?

Burning questions to borrowers...

1. Are there any houses out there you still think that is not overvalue? Still berbaloi?
2. Assumed that you found one, does it fit into your desired picture? Safe surrounding?
3. Assumed that you also found one, are you quick enough to snap it?

"Trouble Ahead"?

Assuming that loan rates as BLR-2.2% (BLR currently is 6.30%) and a 100% loan amount of RM220,000, the monthly loan repayment is RM1,063. If an eligible guy take the loan with maximum salary of RM3,000 allowed, the take home pay after EPF deduction was RM2,670 only. This translates into 40% of net income!

Example calculations of monthly loan repayment

Do not forget the legal fees, stamp duty, fire insurance, MRTA, cukai pintu, cukai tanah and renovations fees! I think most of our fresh graduates will buy a new car first. Assuming that the car loan installment is RM500 monthly, this would add up to 58% of net income!

To make trouble bigger, please take note of the changing interest rate environment, which means the BLR would possibly revised upward in the future. Then, your loan repayment will be adjusted higher accordingly. Can you afford your loan repayment then?

Related posts:

3 Wrong Perceptions on Malaysia Properties

70% Loan to Value (Nov 2010)

Why China Raised Interest Rate? And, what's the effect?

Extractions from BNM monetary policy statement

As expected, Bank Negara Malaysia (BNM) decided to maintain the Overnight Policy Rate (OPR) at 2.75% yesterday. This was the 3rd time in a row that BNM left it unchanged. Are there any hints by BNM on Malaysia's economy this year? We can explore the "hidden messages" from the monetary policy statement as below:

Regional Front:

• While advanced economies continue to register modest growth, most emerging economies have experienced strong growth.
• For Asian region, domestic economic activity continues to support the growth momentum amid weaker external demand.
• Shifts in global liquidity have resulted in significant capital flows into the emerging economies, in particular, Asian region, and have brought with it risks to macroeconomic and financial stability.
• The region is also being affected by global inflationary pressure arising from the higher commodity and food prices.

On Malaysia:

• Recent indicators point towards a sustained expansion in private sector activity.
• External demand, however, was affected by the slower global growth.
• Malaysian economy is expected to grow at a steady pace in 2011, underpinned by continue firm expansion in domestic demand.
• Private consumption will be supported by sustained employment and income growth.
• Private investment activity will be supported by domestic-oriented sectors and the expansion of new growth industries.

 On Inflation:

• Domestic headline inflation rose towards the end of 2010 albeit remained low at 2.2%.
• The increased was mainly on account of higher food and energy prices.
• Prices are expected to increase at a modest pace in the coming months, driven primarily by rising global commodity and food prices.
• The assessment is that inflation will continue to be driven by supply factors with limited evidence of excess demand exerting pressure on prices.

BNM Conclusions:

• BNM considers the current monetary policy stance as appropriate and consistent with current assessment of the economic growth and inflation prospects.
• The stance continues to remain accommodative and supportive of economic growth.
• Going forward, additional policy tools such as the statutory reserve requirement (SRR) and macro-prudential lending measures may be considered to avoid the risks of macroeconomic and financial imbalances.

Finance Malaysia view:

• We expected inflation to rise at a faster pace in 2011
• BNM to continue hiking interest rate in second-half 2011
• OPR potentially be raised by 50-75 basis points to 3.25-3.50%
• Bank's loan growth will slow if SRR was raised

Source: BNM website

For full BNM monetary policy statement, click here.


Related posts:
70% Loan to Value
How BNM OPR hiking affecting the market?

Credit Card Insurance, worth it?

I believe almost every credit card users had been offered a new type of insurance - credit card insurance.

What is credit card insurance?

• it insured you of the outstanding amount owed in your credit card
  
• it covers death and disablement of credit card holders
  
• it charges card holders an insurance premium annually normally
  

And, in my case, it offers me a better plan which only charge me if there is any outstanding credit card loan. If you're a prompt paymaster, this is definitely the better option for you. If you agreed on the deal, all you need is to answer 'YES' through the phone. Then, they will issue a contract notes and mail to your home address.

Ya... Pretty easy and convenient though.
But, is it worth to have such insurance?

Finance Malaysia opine that it is not worth, and its a waste of money because of the following points:-

• Credit card supposed is for our ease of making purchases, especially for those 0% installment deals.
• Those who opts credit card loans would have been due to financial constrain.
• By charging extra premium on top of the loan amount will UP the outstanding loan amount, thus, the monthly repayment.

70% Loan to Value

On 3rd November 2010, Bank Negara Malaysia wishes to announce with immediate effect the implementation of a maximum loan-to-value (LTV) ratio of 70%, which will be applicable to the 3rd house financing facility onwards taken out by a borrower.

Financing facilities for purchase of the 1st and 2nd homes are not affected and borrowers will continue to be able to obtain financing for these purchases at the present prevailing LTV level applied by individual banks based on their internal credit policies.

Why?

The measure aims to support a stable and sustainable property market, and promote the continued affordability of homes for the general public. 

At the national level, residential property prices have increased steadily in tandem with economic development and the rise in income levels.  This aggregate growth trend remains largely manageable and has not deviated from the long term trend in residential property prices.  In the more recent period, however, specific locations, particularly in and around urban centres, have experienced faster growth, both in the number of transactions and in house prices. This is further supported by an increase in financing provided for multiple unit purchases by a single borrower, suggesting increasing investment activity that is of a speculative nature.

The targeted implementation of the LTV ratio is expected to moderate the excessive investment and speculative activity in the residential property market which has resulted in higher than average price increases in such locations. This has also led to increases in house prices in surrounding locations, thus contributing to the declining overall affordability of homes for genuine house buyers.  This measure therefore remains supportive of the objective of encouraging home ownership among Malaysians which continues to be an important national agenda.

Finance Malaysia:

A conservative move by BNM, to avoid dampening the whole property market, and at the same time taking pre-cautious measure to "deflate the mini property bubble". As FM mentioned before, Government should introduce a higher Real Property Gain Tax (RPGT) which could effectively curb excessive speculation. But, such move is not popular in view of the upcoming general election which could be held as soon as first half of 2011.

FM DO NOT think that the latest movement by BNM will have any effect on the market. This is because one could buy his/her 3rd house using his/her child or spouse name instead. Maybe this is an advantage of having many children?

Source: BNM website

Questions created by PTPTN

Today, it marks a historic milestone for my PTPTN's loan. After waiting for a year since the day government announced that it will reduce the interest rate from 3% to 1%, all the borrowers' wish finally came true.

I am very pleased with the announcement, though, it should be more effective. Understandably, there are thousands of borrowers who had taken up the education loan. However, did PTPTN file and store those record in a systematic way? If so, why would it take so long?

Right after the announcement, many of us (loan takers) curiously thinking about the procedure, terms and conditions applies, and of course, when would it started. Then, I believe many of us can't wait anymore, and take the first step by ringing up to inquire about the issue.

Personally, I did called. Surprisingly, the official politely told us that NOT everyone are entitle for the reduced 1% interest rate. The term was: "Qualified borrowers is meant for those who regularly repay the loan for the past 12 months".

Fortunately, I am one of those qualified borrower (I think). However, there was a lists of questions?

What does 'regularly' mean? Repaying 3 months in one shot, can?

This is because there is a transaction fee each time we repay loan. Hence, many of us prefer to repay in one shot, albeit bigger amount, to reduce our costs and avoiding the monthly hassle.

The reduced rate is on the outstanding loan amount?

This would be unfair for those who regularly repaying a certain amount, as we are serving interest only initially. If this is the case, what's the incentive for us to repay early previously?

Until now, we still are unsure about the entitlements and the procedures, if any.

Conclusion was clarifications from PTPTN are very much needed here. Not because we don't want to repay, in fact, we need the assurances given by PTPTN.