Differences in statistical approaches were the reasons behind the discrepancies in housing loan rejection rates, says the Association of Banks in Malaysia (ABM).
The organisation for commercial banks said the approval rate on housing loans was 73.8% last year as the figure took into approved loans which were accepted and cancelled by the applicants.
At the same time, banks will not include incomplete applications when calculating the approval/rejection rate, ABM said in a statement last Friday.
The statement came on the back of incongruities on housing loan rejection rates. Developers were claiming that the rejection rate was as high as 60%, suggesting the strict lending rules had hurt the property market and denied many first-time home-buyers a chance to own property.
According to Bank Negara Malaysia (BNM) data, the value of housing loans that had been approved by lenders last year stood at RM87.2 billion. The highest amount of housing loans approved in 2016 was RM8.6 billion recorded in August, while the lowest was in February with loans totalling to RM5.1 billion.
ABM said the figures were different due to opposing methodologies used by each industry.
However, common key factors in evaluating home loan applications were used by banks to determine applicants’ capability of repaying the loan.
The criteria include having a good credit record, fully and accurately disclosing all material information when applying for a home loan as well as ensuring that one is not over-leveraged to make monthly repayments.
“Home buyers must 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.
“With a wide range of home loan products available in the market, it is crucial that customers are able to identify the loan features which are important to them,” said ABM.
For first-time home buyers, ABM suggested financing options such as government schemes including “Skim Rumah Pertamaku” which offer assistance in their property purchase.
Additionally, applicants may also want to consider applying for projects under “PR1MA Corp Malaysia” which offer the opportunity for middle-income households to own a home in key urban centres while also providing rent-to-own schemes, it said.