KL fights high household debt

(6 July) ? Malaysia?s central bank has imposed maximum terms for mortgages and personal loans, joining Singapore in moving to limit risks from rising household debt.

Curbing excessive household debt

Household indebtedness levels have been increasing at an average of 12% a year for the past five years, Bank Negara Malaysia said in a statement on Friday.

Malaysian households are the most indebted in Asia relative to what they earn, at 182% of annual income, according to a report released by Standard Chartered Bank?this week. The figure for Thailand was 95%, the report said.

Bank Negara said lenders could not offer mortgages longer than 35 years, compared with 45 years previously.

There has been a growing trend in the offering of financial products that are not in the long-term interest of consumers, Bank Negara said. Such practices encourage excessive debt accumulation by households and increase the vulnerability of this sector, it added.

The latest move adds to controls imposed since 2010 that included limiting the loan-to-value ratio for people taking out third mortgages, as the regulator sought to pre-empt property speculation.

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Read more: http://www.bangkokpost.com/breakingnews/358543/

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Source: http://www.tremeritus.com/2013/07/07/kl-fights-high-household-debt/

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