KUALA LUMPUR (Oct 21): About 88% of developers polled by the Real Estate and Housing Developers’ Association Malaysia (REHDA) said they continued to face end-financing issues in the first half of 2021 (1H21).
Respondents to REHDA's Property Industry Survey 1H2021 revealed that the top three reasons for end-financing rejections were ineligibility due to buyers' income, buyers being offered a lower margin of financing and inadequate financial information provided by buyers.
Notably, 36% or 55 respondents experienced loan rejections at more than 40% for sales of residential properties. This rejection figure includes buyers who were offered a lower margin of financing.
“Being offered a lower margin of financing means that if a buyer needs 90% financing but is only offered 80%, it is viewed by the buyer as a 'rejection' in their loan application,” said REHDA president Datuk Soam Heng Choon.
A total of 34 respondents saw more than 40% loan rejections for residential properties due to a lower margin of financing, while the majority of developers who saw loan rejections for the reason of a lower margin of financing fell in the region of 11% to 20%.
Meanwhile, 35 respondents saw over 40% loan rejections due to buyers' income ineligibility in 1H21.
The survey also revealed that 53% of loan rejections, including a lower margin of financing, were for residential properties in the RM250,001-RM700,000 price range.
About 27% of loan rejections involved residential properties priced between RM250,001 and RM500,000 each, while 26% of loan rejections were for residential properties priced between RM500,001 and RM700,000 each.
“This (RM250,001 to RM700,000 price range) was the major category of sales and it also saw the highest loan rejection [rate],” said Soam.