Malaysia is imposing ‘strict measures’ to prevent a US-style sub-prime mortgage lending crisis after home prices climbed an average of 6.6 percent in the fourth quarter last year.
“The government is worried about property prices causing a bubble and we don’t want banks to over-lend to the property sector,” said Donald Lim, Malaysia’s Deputy Finance Minister.
“We are seeing a lot of foreigners from Middle East and China keen to buy properties in Malaysia.”
According to data released by Bank Negara Malaysia, mortgage applications climbed 46 percent in February to RM14.96 billion (S$6 billion).
The central bank last tightened its mortgage lending rules in November, restricting the loan-to-value (LTV) ratio for buyers taking a third mortgage to buy homes.
Singapore and Hong Kong have also implemented measures to curb the housing market and control inflation.
“With the tightening in Hong Kong and Singapore, there is certainly a spill-over to the Malaysia property market, particularly Kuala Lumpur,” said Irvin Seah, a Singapore-based economist at DBS Group Holdings Ltd.
“Bank Negara has always been worried about financial imbalances.”
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