The Malaysian central bank has implemented limitations on the loan-to-value ratio for people taking out third home loans, in a move to curb “excessive” investment and speculation in the urban areas.
Bank Negara Malaysia has imposed a maximum lending limit of 70 percent, which will provide loans of as much as 90 percent of the total property value.
Malaysia joins Singapore, Hong Kong and China in introducing such a measure to curb the property market, as concerns of asset bubbles are growing due to increasing home prices.
In August, Singapore increased the down payment for second home purchases and implemented a stamp duty on property acquired for less than three years.
“Specific locations, particularly in and round urban centres, have experienced faster growth, both in the number of transactions and in house prices,” said the central bank in a statement. “This is further supported by an increase in financing provided for multiple-unit purchases by single borrowers, suggesting increasing investment that is of a speculative nature.”
The Kuala Lumpur Property Index, which comprises 88 developer’s shares, has jumped 28 percent this year, outpacing the 18 percent gain in the country’s benchmark stock index.
The targeted implementation of the loan-to-value ratio is aimed at moderating the “excessive” speculation in the property market without providing supporting data, said the central bank.