08 April 2016

Only one out of five loan applications are rejected

  08 April 2016


The Association of Banks in Malaysia (ABM) has denied the Real Estate and Housing Developers Association’s (Rehda) claims that the rejection rate for affordable housing loan applications are high.

ABM chairman, who is also Malayan Banking Bhd (Maybank) group president and chief executive officer, Datuk Abdul Farid Alias, said out of 456,000 housing loan applications received by the industry last year, only 92,000 or 20.39% were rejected, instead of over 50% as claimed by Rehda.
“For loans with principal amount of less than RM500,000, rejection rate by the industry last year was 19%; for RM500,000-RM1 million range, the rejection rate was 20.71%; RM1 million-RM3 million range at 25%; and for loans above RM3 million at 36 per cent,” he said after Maybank’s annual general meeting here, today.

Abdul Farid said the main reasons for these rejections were that borrowers exceeded their debt service ratio, high gearing at the borrowers’ level and failure to establish the borrowers’ repayment capability.

Year-to-date, he said the rejection rate for the industry stood at 20.6% and this would likely be higher this year considering the slower economic growth.

Commenting on some analysts’ gloomy outlook for Malaysia, he said the management of asset quality in Malaysia was holding up, attributed to Bank Negara Malaysia’s responsible guidelines.
Echoing Abdul Farid’s sentiment, Maybank group chief financial officer Mohamed Rafique Merican said foreign funds were beginning to come back into the market, which reflected a return of confidence.

Meanwhile, Bank Rakyat is offering personal financing of up to RM50,000 with approval in just 35 minutes.

The bank said in a statement here its Personal Financing-i Quick Cash scheme comes with a 9.73% profit margin.

“The maximum financing amount is RM50,000 for five years.”

Bank Rakyat said the financing, which includes takaful coverage, would not require any guarantor, deposit or supporting document, adding customers at selected branches in Johor, Penang, Sabah, Selangor and Kuala Lumpur just need to present their MyKad. READ MORE: http://www.therakyatpost.com/business/2016/04/07/banking-association-one-out-of-five-loan-applications-rejected/
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