HUNGRY FOR LOANS: Loans growth in March jumped amidst talk that there might be more cooling measures coming up even as competition among banks starts to get fierce
Since the enforcement of the new lending guidelines, loans growth for January came down to 12.1 per cent year on year (y-o-y) as compared to December 2011 at 13.6 per cent y-o-y. Total loan applications were down almost 3 per cent from a year ago.
As per previous record, again the market adjusted after awhile and in March, loan demand and approvals increased significantly for both businesses and households. Loans growth has increased to 12.2 per cent y-o-y in March as compared to January.
Loan applications jumped from RM56.8 billion in January 2012 to RM81.1 billion in March 2012 which is one of the highest hikes for the past two years. At the same time, loan approvals also increased from RM26.7 billion in January 2012 to RM38.1 billion in March 2012.
These numbers are telling us that property purchasers as well as the banks have already adjusted to the tightening of lending policy by Bank Negara.
Where profit is the bottom line, competition among banks to grab a bigger market share in the lending market is still very competitive.
The banks are constantly coming up with innovative loan packages to attract borrowers. I will not be surprised if some banks were to bring back the free moving cost packages to attract more borrowers. When this was introduced many years back, many borrowers opted for this type of package although the interest rate is higher than the normal loan. I feel that this type of competition is good for us because we as consumers will be able to enjoy more choices of loan packages and in the end, we will enjoy more cost savings.
Banks are still keen to lend but the only difference is today banks are more careful in lending and will only consider good credit standing borrowers. No doubt that there are some banks that are really tightening their lending but there are also banks that are still liberal in their loan approvals. Banks still have to keep a healthy Loan to Deposit Ratio.
My personal gut feeling looking at the current market situation is telling me that Bank Negara will go for another round to tighten up the lending policy very soon and for this round, it might affect the commercial properties.
For those who are keen to learn more on Mortgage Financing in Malaysia, please log on and register for my monthly seminar at www.swhengtee.com.my/penang
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