Commercial banks say no truth in tougher credit checks on home buyers

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KUALA LUMPUR (May 25): The Association of Banks in Malaysia (ABM), which represents 27 commercial banks operating in the country, said it is "not true" there are now tougher credit checks on potential home buyers.

Its executive director Chuah Mei Lin said consumers who are eligible will continue to be able to obtain financing, adding that the association is fully supportive of the government’s various initiatives to assist households from low and middle-income groups to purchase their own homes.

"What is important is for all consumers to recognise the need to make sound decisions of their own affordability appropriate to their financial circumstances," she said in a statement today.

"Member banks are continually reviewing their strategies and engaging with the authorities to boost home ownership in the country while reining in household debt,” she added.

Chuah noted that the rejection rate for housing loans have been on a declining trend to 18% last year from 25% in 2012, reflecting borrowers and lenders adjusting better to the affordability assessments.

“The business of commercial banks is in the main lending or extending credit, while adhering to their respective risk appetites and/or the guidelines set by the regulators.

Under Bank Negara Malaysia's Guidelines on Responsible Financing, while the guidelines does not prescribe a debt service ratio, banks should be able to demonstrate that borrowers have adequate buffers to manage unexpected expenditures, a rise in borrowing costs, or income shocks.