Malaysia’s housing loan growth slowed to 6.9% year-on-year (y-o-y) in 2024, compared to 7.3% in 2023, according to Bank Negara Malaysia’s (BNM) Financial Stability Review – Second Half 2024. Despite the slowdown, the central bank reported that housing loan quality remains strong, with a low impairment ratio of 1.2%.
Key Highlights from BNM’s Report
Housing Loan Growth: Overall outstanding housing loans expanded by 6.9% y-o-y as of December 2024, down from 7.3% in 2023.
Owner-Occupiers Drive Growth: Borrowers with a single housing loan, including first-time homebuyers, contributed 5.2 percentage points to the total annual growth.
Limited Credit-Fueled Investments: Investors with three or more housing loans contributed just 0.03 percentage points in December 2024, signaling minimal speculative activity.
Strong Loan Quality and Low Impairment Ratios
BNM highlighted that outstanding housing loans remain largely performing across all borrower types:
Overall Impairment Ratio: 1.2% (considered low).
Owner-Occupier Impairment Ratio: 1.3%.
Individual Property Investor Impairment Ratio: 0.9% – lower than owner-occupiers, likely due to their stronger financial profiles.
According to the report, 80% of individual property investors earn more than RM5,000 monthly, supporting their ability to service loans effectively.
Prudent Loan-to-Value (LTV) Ratio and Stable Market Conditions
The median loan-to-value (LTV) ratio of outstanding housing loans remained at 69.7%, providing a buffer against potential house price corrections.
BNM assessed downside risks to financial stability from the property market as low, citing sound lending standards and stable economic conditions as key factors.
Conclusion
While housing loan growth has moderated in 2024, the Malaysian property market remains stable, with low impairment ratios and responsible lending practices. With limited speculative activity and strong investor financial profiles, BNM’s findings suggest that the risk of a severe property market correction is unlikely in the near term.