Banks and financial institutions should not be too strict and rigid in approving housing loans to eligible borrowers during this global financial crisis.
Real Estate and Housing Developers Association (Rehda) Johor branch immediate past chairman Steven Shum said they should not use the situation in Europe and the US as an excuse.
“We believe banks are cautious now but they should not tighten for the sake of tightening,” he told StarBiz.
Shum said banks in the country should not use the subprime crisis or credit crunch in the US as an excuse not to dispose loans to deserving consumers in Malaysia.
He said although giving out loans was the prerogative of the banks, sometimes it required judgment, confidence and trust on their side.
Shum said if the businesses were viable or the persons applying for the loans had long-term employment and able to serve their loans, banks should not be reluctant to lend them the money.
“At the same time, banks also should look at ways to assist existing borrowers to either refinance their loans or extend their payment period.
“It should be a win-win situation for both the banks and borrowers and the Government must step in to ensure that both parties are well protected,” said Shum.
Developers were likely to consolidate during this time and would look at better construction methods to reduce cost, he said, adding that more were expected to adopt the pre-fabricated method as the costs of labour and raw materials were escalating.
“The pre-fabricated method seems to be a better choice because fewer defects occur during construction, as the pieces are manufactured at the factories compared with the in-situ methods.”
Beginning next year, most developers would go for small launches, said Shum.
Rehda Johor will be organising the Malaysia Property Expo 2008 at the Podium Area, Johor Baru City Square shopping complex, from Oct 30 to Nov 2.
Although the economic outlook was not good, 34 developers taking part in the event were still optimistic that they would be able to generate RM60mil in sales, he said.
He added that they were committed to serve and deliver their products during good or bad times and buyers should use the event to do market research.
Source: The Star Online
Date: 23/10/2008
Thursday, October 23, 2008
Wednesday, October 22, 2008
Rate cut likely to be put on hold
Conditions may seem ripe for Bank Negara to cut interest rates at the monetary policy meeting on Friday but economists feel the central bank may leave rates unchanged for the moment.
Domestic economic indicators still show some strength and economists feel interest rates would only be cut should there be signs of a precipitous decline in the economy.
“There are no worrying signals yet and I don’t think Bank Negara will rush to react,’’ said Aseambankers Malaysia Bhd chief economist Suhaimi Ilias. “Perhaps from Bank Negara’s standpoint, the economy is fairly resilient.’’
Worries have emerged over the health of Malaysia’s external trade and industrial production, but consumption indicators such as strong sales of cars in September and credit card repayments indicate the consumer was still in good financial health. This sends a mixed bag of signals on the health of the economy.
The possibility of a rate cut in Malaysia was floated by some after the Government on Monday released pre-emptive measures such as giving RM5bil to Valuecap Sdn Bhd and promising not to cut spending to stabilise the economy. Details of the full package would be known on Nov 4.
The Government’s move was in response to external-led economic worries, which have led to a number of countries to introduce fiscal measures with deep cuts in domestic interest rates.
Those countries have slashed interest rates over the past few weeks to keep growth rates up on concerns over the repercussions from a financial meltdown in the US.
A similar argument for Malaysia could be made but economists were quick to point out that Bank Negara kept interest rates steady in the past even though other countries were raising rates to stem off inflationary pressures. Those interest rate hikes were made prior to the financial crisis in the US.
“At this point, there is ample liquidity in Malaysia,’’ said RAM Holdings Bhd chief economist Dr Yeah Kim Leng.
“When a market lacks confidence, it is not the rate cut that counts.’’
Yeah said there was a possibility of a cut in rates, but he too does not think it would take place at the end of the week.
He said that with real interest rates extremely low as they already were, any cut in the current global environment might not be as effective given the lack of confidence in the global capital markets.
Bank Islam Malaysia Bhd senior economist Azrul Azwar also felt that Bank Negara would keep interest rates unchanged.
“Come Nov 24, the date of the final meeting for the year, Bank Negara might have more or less a complete picture of the current economic trends in Malaysia,’’ he said. “If by then the economy does turn out to be worse, Bank Negara may cut interest rates then.”
Source: The Star Online
Date: 22/10/2008
Domestic economic indicators still show some strength and economists feel interest rates would only be cut should there be signs of a precipitous decline in the economy.
“There are no worrying signals yet and I don’t think Bank Negara will rush to react,’’ said Aseambankers Malaysia Bhd chief economist Suhaimi Ilias. “Perhaps from Bank Negara’s standpoint, the economy is fairly resilient.’’
Worries have emerged over the health of Malaysia’s external trade and industrial production, but consumption indicators such as strong sales of cars in September and credit card repayments indicate the consumer was still in good financial health. This sends a mixed bag of signals on the health of the economy.
The possibility of a rate cut in Malaysia was floated by some after the Government on Monday released pre-emptive measures such as giving RM5bil to Valuecap Sdn Bhd and promising not to cut spending to stabilise the economy. Details of the full package would be known on Nov 4.
The Government’s move was in response to external-led economic worries, which have led to a number of countries to introduce fiscal measures with deep cuts in domestic interest rates.
Those countries have slashed interest rates over the past few weeks to keep growth rates up on concerns over the repercussions from a financial meltdown in the US.
A similar argument for Malaysia could be made but economists were quick to point out that Bank Negara kept interest rates steady in the past even though other countries were raising rates to stem off inflationary pressures. Those interest rate hikes were made prior to the financial crisis in the US.
“At this point, there is ample liquidity in Malaysia,’’ said RAM Holdings Bhd chief economist Dr Yeah Kim Leng.
“When a market lacks confidence, it is not the rate cut that counts.’’
Yeah said there was a possibility of a cut in rates, but he too does not think it would take place at the end of the week.
He said that with real interest rates extremely low as they already were, any cut in the current global environment might not be as effective given the lack of confidence in the global capital markets.
Bank Islam Malaysia Bhd senior economist Azrul Azwar also felt that Bank Negara would keep interest rates unchanged.
“Come Nov 24, the date of the final meeting for the year, Bank Negara might have more or less a complete picture of the current economic trends in Malaysia,’’ he said. “If by then the economy does turn out to be worse, Bank Negara may cut interest rates then.”
Source: The Star Online
Date: 22/10/2008
Announcement On Price Reduction For Consumer Products On Friday - Shahrir
In line with Prime Minister Datuk Seri Abdullah Ahmad Badawi's call to industries to reduce prices of commodities and oil, consumers can expect a reduction in prices of essential products by Friday, says Domestic Trade and Consumers Affairs Minister Datuk Shahrir Samad.
Shahrir said his Ministry had held discussions with a number of hypermarkets but so far only company had agreed to reduce the prices of essential products.
"We hope more companies will agree to reduce prices, especially prices of food and household products," he told reporters after meeting representatives of Non Governmental Organisations (NGO), Industries and Media at his Ministry here Wednesday.
He added that apart from trying to reduce the prices of essential goods, his Ministry was also carrying out a study to overcome a shortage in supply of essential products in rural areas.
"We are carrying out a pilot project in Seberang Perai Utara, Penang and Pekan, Pahang to improve the delivery system so that rural areas can receive essential products on time and at a reasonable price. The project has been successful and I will submit it to the cabinet," he said.
Speaking of a demand by 3,200 petrol station operators who had claimed RM41 million in compensation from the Finance Ministry, Shahrir said in business, loses are a common risk faced by everyone and that no business was free from such risks.
The 3,200 petrol station operators had claimed that the 10 sens reduction in oil prices by the government on Oct 15, had resulted in loses amounting to RM41 million.
"Since the price of crude oil in the global market had dropped, the government had decided to reduce the price so that the people can enjoy the benefit. If we (government) didn't do that it won't be fair," he said.
He added that the operators had also urged the government to review oil prices once a month and not once in two weeks but they must understand that though we review the prices every 14 days, it does not mean that prices would go down.
"They can avoid risks by not stocking up supply before the old stock runs out," said Shahrir.
Source: Bernama.com
Date: 22/10/2008
Shahrir said his Ministry had held discussions with a number of hypermarkets but so far only company had agreed to reduce the prices of essential products.
"We hope more companies will agree to reduce prices, especially prices of food and household products," he told reporters after meeting representatives of Non Governmental Organisations (NGO), Industries and Media at his Ministry here Wednesday.
He added that apart from trying to reduce the prices of essential goods, his Ministry was also carrying out a study to overcome a shortage in supply of essential products in rural areas.
"We are carrying out a pilot project in Seberang Perai Utara, Penang and Pekan, Pahang to improve the delivery system so that rural areas can receive essential products on time and at a reasonable price. The project has been successful and I will submit it to the cabinet," he said.
Speaking of a demand by 3,200 petrol station operators who had claimed RM41 million in compensation from the Finance Ministry, Shahrir said in business, loses are a common risk faced by everyone and that no business was free from such risks.
The 3,200 petrol station operators had claimed that the 10 sens reduction in oil prices by the government on Oct 15, had resulted in loses amounting to RM41 million.
"Since the price of crude oil in the global market had dropped, the government had decided to reduce the price so that the people can enjoy the benefit. If we (government) didn't do that it won't be fair," he said.
He added that the operators had also urged the government to review oil prices once a month and not once in two weeks but they must understand that though we review the prices every 14 days, it does not mean that prices would go down.
"They can avoid risks by not stocking up supply before the old stock runs out," said Shahrir.
Source: Bernama.com
Date: 22/10/2008
Rising cost of living puts a damper on Deepavali sales
The Star Multimedia team recently spoke to shoppers and retailers at the KL Sentral Deepavali bazaar to hear what they have to say.
Monday, October 20, 2008
During financial "tsunami" buying property a better bet
CAN the financial “tsunami” currently drowning many banks in the United States and Europe hit our shores? And, if so, how will our property market be affected?
I believe we cannot run away from the contagion effects of the credit crunch in the West and like it or not when our economy is affected, so will the property market.
However, we will pull through especially given our conservative and well-regulated banking system.
The good thing is we are not faced with a property “bubble” as in the early 1990s and also, banks have reduced their construction loans since end of last year to avoid an over-supply situation.
Fear, uncertainty and even panic have gripped many investors who have dumped their shares in the local bourse.
We must remember that it’s not the global credit crunch that is worrying but soaring inflation caused mainly by spikes in crude oil prices. Although crude oil price has dropped recently, it may go up again.
Our property market has been affected by the high construction costs, inflation and a perceived over-built situation especially of high-end homes.
However, I am confident that if one has extra money and can afford to service a loan, investing in property especially in a good location is still a safer bet and will yield better returns in the long run.
This is not to say that one should not save money in fixed deposits. It is always prudent to have sufficient savings but with fixed deposit rates hovering around 3.7% to 4.2% for 12- and 60-month tenures respectively, it is still a negative return when compared with the current inflation rate of over 7% (for many people it is more like 30%).
What about the stock market? Punters have been nibbling at some bargains in the hope of making a tidy profit in the event of an upswing in price. Trouble is many of us are unsure of when it will hit bottom and how long it will take for it to recover, not to mention a bull-run which seems unlikely in the near future.
Unlike property, which is solid brick and mortar, share prices are often determined by sentiments and, currently sentiments are very weak. Many property counters have taken a beating.
My advice for those wishing to buy their first home is to do it now. Don’t fool yourself that prices of new launches will come down because developers cannot afford to reduce prices anymore as their profit margins are already cut to the bone.
In fact many developers I talked to said they were either withholding launches or increasing prices by 20% to 30%. This is also a good time to go bargain hunting in the secondary market and snap up unsold units of upmarket residential homes before developers are forced to increase their price.
Those who can afford homes priced above RM1mil may hold back on their purchase because of the prevailing global financial and local political uncertainties. There are already reports of some high-end projects having problems pushing off their units.
Times are indeed very challenging.
Even established companies such as Sunrise Bhd has seen a 50.6% drop in property sales from RM1.182bil in 2007 to RM583mil for its financial year ended June 30, 2008.
Sunrise executive chairman Tong Kooi Ong in the latest annual report said the current environment was extremely hostile to property developers in launching new properties, even if they could secure financing.
“We face many of the same challenges as other developers. The most critical currently is the sharp rise in construction costs. With a weaker demand condition, gross margins of future projects will likely fall.
“Projects launched earlier face shrinking profits due to higher costs now. Sales will also likely be slower in the months ahead affecting cash flows and profits negatively.
“With two major future projects on the basis of build-then-sell, our gearing is expected to rise substantially and our interest expenses is likely to be much higher,” he said.
Tong said the sudden and substantial rise in costs had severely damaged the construction industry’s capacity.
“This will affect timely completion of projects and will reduce the availability of suppliers and contractors. The industry is further challenged by the increasing shortage of professionals due to the attraction of overseas markets,” he added.
He warned that construction costs for new projects were expected to rise even further in the months ahead.
“The weaker demand means developers will not be able to adjust prices upwards, leaving little, if any, profit margins,” he said, adding that problems faced by contractors, with mounting costs and shrinking cash flow, would further burden developers.
Source: The Star Online
Date: 20/10/2008
I believe we cannot run away from the contagion effects of the credit crunch in the West and like it or not when our economy is affected, so will the property market.
However, we will pull through especially given our conservative and well-regulated banking system.
The good thing is we are not faced with a property “bubble” as in the early 1990s and also, banks have reduced their construction loans since end of last year to avoid an over-supply situation.
Fear, uncertainty and even panic have gripped many investors who have dumped their shares in the local bourse.
We must remember that it’s not the global credit crunch that is worrying but soaring inflation caused mainly by spikes in crude oil prices. Although crude oil price has dropped recently, it may go up again.
Our property market has been affected by the high construction costs, inflation and a perceived over-built situation especially of high-end homes.
However, I am confident that if one has extra money and can afford to service a loan, investing in property especially in a good location is still a safer bet and will yield better returns in the long run.
This is not to say that one should not save money in fixed deposits. It is always prudent to have sufficient savings but with fixed deposit rates hovering around 3.7% to 4.2% for 12- and 60-month tenures respectively, it is still a negative return when compared with the current inflation rate of over 7% (for many people it is more like 30%).
What about the stock market? Punters have been nibbling at some bargains in the hope of making a tidy profit in the event of an upswing in price. Trouble is many of us are unsure of when it will hit bottom and how long it will take for it to recover, not to mention a bull-run which seems unlikely in the near future.
Unlike property, which is solid brick and mortar, share prices are often determined by sentiments and, currently sentiments are very weak. Many property counters have taken a beating.
My advice for those wishing to buy their first home is to do it now. Don’t fool yourself that prices of new launches will come down because developers cannot afford to reduce prices anymore as their profit margins are already cut to the bone.
In fact many developers I talked to said they were either withholding launches or increasing prices by 20% to 30%. This is also a good time to go bargain hunting in the secondary market and snap up unsold units of upmarket residential homes before developers are forced to increase their price.
Those who can afford homes priced above RM1mil may hold back on their purchase because of the prevailing global financial and local political uncertainties. There are already reports of some high-end projects having problems pushing off their units.
Times are indeed very challenging.
Even established companies such as Sunrise Bhd has seen a 50.6% drop in property sales from RM1.182bil in 2007 to RM583mil for its financial year ended June 30, 2008.
Sunrise executive chairman Tong Kooi Ong in the latest annual report said the current environment was extremely hostile to property developers in launching new properties, even if they could secure financing.
“We face many of the same challenges as other developers. The most critical currently is the sharp rise in construction costs. With a weaker demand condition, gross margins of future projects will likely fall.
“Projects launched earlier face shrinking profits due to higher costs now. Sales will also likely be slower in the months ahead affecting cash flows and profits negatively.
“With two major future projects on the basis of build-then-sell, our gearing is expected to rise substantially and our interest expenses is likely to be much higher,” he said.
Tong said the sudden and substantial rise in costs had severely damaged the construction industry’s capacity.
“This will affect timely completion of projects and will reduce the availability of suppliers and contractors. The industry is further challenged by the increasing shortage of professionals due to the attraction of overseas markets,” he added.
He warned that construction costs for new projects were expected to rise even further in the months ahead.
“The weaker demand means developers will not be able to adjust prices upwards, leaving little, if any, profit margins,” he said, adding that problems faced by contractors, with mounting costs and shrinking cash flow, would further burden developers.
Source: The Star Online
Date: 20/10/2008
Najib: Country not in financial crisis
Finance Minister Datuk Seri Najib Tun Razak says the government is mindful of the impact of global financial turmoil but remains confident in Malaysias financial sector.
Malaysia ideal as hub for international dispute resolutions
Prime Minister Datuk Seri Abdullah Ahmad Badawi says foreign investors and the international dispute resolution community can rest assured that Malaysia is well-equipped to be the major hub for international arbitration and dispute resolutions.
Friday, October 17, 2008
Malaysia, Singapore guarantee bank deposits
Bank Negara's guarantee will cover all ringgit and foreign currency deposits in banks, investment banks and financial firms
SINGAPORE/KUALA LUMPUR: Singapore and Malaysia yesterday pledged to guarantee all local and foreign currency bank deposits, joining governments across the world in shoring up confidence in the embattled banking system.
The neighbouring Southeast Asian countries announced within minutes of each other they will guarantee bank deposits until December 2010.
In the past week Hong Kong, Australia and New Zealand have provided blanket guarantees on all deposits amid a crisis of confidence in global financial markets.
Their actions, however, threatened to draw deposits from neighbouring Asian countries, leading other governments to follow suit with matching assurances.
Singapore’s finance ministry and central bank said in a joint statement the government will back all local and foreign currency deposits in banks, finance firms and investment banks in the country.
The guarantee will be backed by S$150 billion (US$101.4 billion) of government reserves.
“Although Singapore’s banking system continues to be sound and resilient, the government has decided to take precautionary action to avoid an erosion of banks’ deposit base and ensure a level international playing field for banks in Singapore,” the statement said.
Malaysia’s central bank said the government guarantee will cover all ringgit and foreign currency deposits in banks, investment banks and financial firms.
Bank Negara also said access to its liquidity facility will be extended to insurance firms and takaful operators that it supervises and regulates.
It added Malaysia’s banking system was sound and well capitalised, and “it is unlikely that these guarantees will be called upon”.
“These measures are pre-emptive and precautionary, since Malaysian financial institutions are well-capitalised with ample liquidity, and confidence of depositors remains intact,” it said.
Source: Business Times Online
Date: 17/10/2008
SINGAPORE/KUALA LUMPUR: Singapore and Malaysia yesterday pledged to guarantee all local and foreign currency bank deposits, joining governments across the world in shoring up confidence in the embattled banking system.
The neighbouring Southeast Asian countries announced within minutes of each other they will guarantee bank deposits until December 2010.
In the past week Hong Kong, Australia and New Zealand have provided blanket guarantees on all deposits amid a crisis of confidence in global financial markets.
Their actions, however, threatened to draw deposits from neighbouring Asian countries, leading other governments to follow suit with matching assurances.
Singapore’s finance ministry and central bank said in a joint statement the government will back all local and foreign currency deposits in banks, finance firms and investment banks in the country.
The guarantee will be backed by S$150 billion (US$101.4 billion) of government reserves.
“Although Singapore’s banking system continues to be sound and resilient, the government has decided to take precautionary action to avoid an erosion of banks’ deposit base and ensure a level international playing field for banks in Singapore,” the statement said.
Malaysia’s central bank said the government guarantee will cover all ringgit and foreign currency deposits in banks, investment banks and financial firms.
Bank Negara also said access to its liquidity facility will be extended to insurance firms and takaful operators that it supervises and regulates.
It added Malaysia’s banking system was sound and well capitalised, and “it is unlikely that these guarantees will be called upon”.
“These measures are pre-emptive and precautionary, since Malaysian financial institutions are well-capitalised with ample liquidity, and confidence of depositors remains intact,” it said.
Source: Business Times Online
Date: 17/10/2008
Wednesday, October 1, 2008
Malaysia Home Loans - What's New (October, 2008)
October arrives ushering in the festive months, starting with Hari Raya with Deepavali and Christmas closely in tow. Before you know it, it is 2009 and Chinese New Year again. It is a joyous time…but for a most people, these few months also happen to be the most expensive months of the year.
Payment Holidays:
For those who took their home loans from Bank Islam, there is reprieve as the special feature of Bank Islam’s loans is the built-in 2-month payment holiday in November and December of each and every year of the loan tenure. Handy, if you have just blown the Raya budget into orbit, or simply planning to take that long overdue year end get-away.
And the interest rates aren’t too shabby either with rates such as Baiti Home Financing-i (BFR-1.30% to BFR-1.80%) & Baiti Cakna Financing-i (Yr 1: 3.00%, Yr 2: 5.00%, TA: 7.00%)
Lowest Interest Rate:
Competition among lending banks continue to be fiercely fought and EON Bank signals it’s presence with a smashingly low rate of BLR-2.3% for the whole tenure making this the lowest BLR-based loan (for the entire loan tenure) on offer in the market. The package is for property values higher than RM200,000 and is a non-ZEC (non zero entry cost) package [Click here to calculate Entry Cost]. MRTA is compulsory. Lock in period is 5 years and a penalty of 5% of loan amount or RM5,000 is charged for early redemption.
For ZEC package, EON offers BLR-2.10% for years 1-6, and BLR-2.3% thereafter. Lock-in period for the ZEC package is 6 years.
EON’s offer ends 31st October 2008.
For variations of the package e.g ZEC packages, see here.
Fixed Low-start Loan:
These are loans with fixed interest rates in the initial years before reverting to a BLR-based interest rate. If you are of the opinion that interest rate is northward bound anytime now but will eventually drop again, then these are the loans for you.
For this category, it’s a coin toss between OCBC, and Asian Finance Bank: OCBC offers 5.5% for the first 3 years, followed by BLR-1.75% (years 4-5) and then BLR-2% thereafter. A very good rate indeed plus the loan carries prepayment and “re-draw” facilities. Minimum loan amount is RM200,000 and the package is a non-ZEC package.
Or if you prefer to enjoy a fixed rate for 5 years, OCBC offers a 5-year fixed rate @ 6.25% followed by BLR-2% from years 6 onwards. [See the rest of OCBC’s loans]
Lock-in period is 3 years for the 5.5% fixed package and 5 years for the 6.25% fixed package.
The other contender in this category is a relatively “new” player i.e. Asian Finance Bank. Not many people have heard of Asian Finance Bank although they will now, with AFB’s introduction of a loan with the welcoming 5% fixed rate in years 1 & 2, followed by BFR-1.5% (negotiable depending on credit strength). There is ZERO LOCK-IN period, so if you can actually clear your entire loan within 2 years, here is the absolutely cheapest loan in town – very useful if you are buying a new property whilst selling off another.
AFB is an Islamic Bank and therefore, like Bank Islam, borrowers enjoy discounts off the stamp duties 20%.
The AFB loan package is for properties in Klang Valley and Johor Baharu only and applies to landed and non-landed properties. Maximum margin is 90% and the big bonus is that there is ZERO lock-in period with this package.
Floating Low-start Loan:
As for “non-fixed low-start” loans, Alliance Bank is still the undisputed champion with BLR-2.4% for years 1 and 2. Thereafter the rate is still attractive at BLR-2.1%.
In addition, margin of borrowing can go up to 90%+5% if borrowers choose to finance legal fees and MRTA. However, this extremely attractive offer is for loan amounts between RM300,000 and RM1Million.
Flexi (Deposit-Linked) Loans:
The “Best Flexi Loan” title is retained by Alliance Islamic . Last month, this is what we wrote about it and nothing has changed:
“While a normal Savelink (deposit-linked) loan allows you to offset the amount you keep in deposit against the loan principal, the deposit-linked- account DOES NOT pay you any interest per se.
Alliance Islamic Flexi is a deposit-linked account that NOT ONLY saves you interest by offsetting the deposit sum against the financing sum…IT ALSO PAYS YOU A “PROFIT RATE”. After all, why have your cake if you can’t eat it.
In addition, the one-time set up fee of RM200 applicable on normal Savelink is also not applicable with the Islamic Flexi.
Other goodies include:
-Financing tenure of 35 years or up to age 65, whichever is earlier
-Maximum financing of 90% of purchase price
-Option to include MRTA and stamp duty into financing (+ additional 5%)
-Option to choose Zero Entry Cost (ZEC)/ Financed Entry Cost (FEC) Package) on daily rest calculation
-Rate protection with capped ceiling rate at 9.9%
-No stamp duty for refinancing from conventional loan
-20% discount on stamp duty for new purchase
-For completed properties and for landed & Non-landed
See Alliance Islamic Financing Rates here…
Subscribe to:
Posts (Atom)
