Prevent Speculation and Property Bubble by Reducing Home Loan Margin to 80 percent

If Bank Negara Malaysia (BNM) decides to impose 80% Loan to Value Ratio (LVR) for home loans mainly to so-called prevent speculation on property prices and the risk of potential property bubble, does it workable? What is your point of view about the policy?

Impact on Own Stay / First House Buyers

The policy of 80% maximum property loan margin is unfair for the first time homebuyer. In order to control the property prices not being over speculated, the genuine homebuyer has become victim under the policy because they buy it for their own stay, not for speculation. It increases their burden further.

Generally, banks are offering 10:90 housing loan packages all the while for residential properties in Malaysia subject to their approval. But now property purchasers will have to pay higher down payment under the new policy.

For instance, you will need to fork out RM60,000 as 20% down payment for a double storey terrace house priced at RM300,000 instead of RM30,000 (10% down payment).

10:90 Housing Loan
Down Payment = RM 30,000
Loan Amount = RM 270,000

20:80 Housing Loan
Down Payment = RM 60,000
Loan Amount = RM 240,000

However, for the long-term consideration, I do support the move of lowering the LVR to 80% to promote healthier property market so that both buyer and bank are able to minimize the impact during economic crisis.

6 thoughts on “Prevent Speculation and Property Bubble by Reducing Home Loan Margin to 80 percent”

  1. Peter Yee

    Reducing home loan margin to 80% is not the best strategy to control property bubble. Why?
    Speculators can raise the S&P price to secure 100% loan,which is legal as long as both seller and purchaser agree.This will further push up the valuation price of property as the valuation price is based on the average of the last 3 transacted S&P prices.
    The Government may consider other options such as raising the RPGT from 5% back to the original 30% and/or gradual increase in interest rate.

  2. knowthymoney

    RPT at 30% will surely bite the speculators hard and make property a very very ugly investment vehicle.

    Thus, you can see the spill-over effect to stocks where it will surely become attractive again vs property.


  3. Ngan

    I was thinking more along the line of 60 – 70% downpayment for those with a 2nd and 3rd properties. Maybe 50% for those with 4 and more properties.

    By imposing a 20% down payment, the government is punishing first time home buyers. They should target speculators, not first time home buyers.

  4. Arron

    Mayb should apply on 3rd property onwards? Becos for 1st time buyer to fork out 20% is outrages.

  5. John

    why 3rd property onwards and not second? because you will buy second house?

  6. Ethan

    @John: 2nd house is not unusual, but 3rd house is definitely for speculators. This move really hurts 1st time house buyer… and I’m so unfortunate to be one of the 1st time house buyer… T.T