With immediate effect, Bank Negara Malaysia (BNM) reduces the maximum loan-to-value (LTV) ratio to 70% instead of normally as much as 90% from the value of the property.
The limit will be applicable to the third house financing facility taken out by a borrower. However, first and second home buyers are not affected by this new rules. They will continue to be able to obtain financing for their purchases at LTV of 90%
The measure aims to support a stable and sustainable property market, and promote the continued affordability of homes for the general public.
The targeted implementation of the loan-to-value ratio is expected to moderate the “excessive” speculation in the residential property market which has resulted in higher than average price increases in some locations especially urban area such as Klang Valley and Penang.
This has also led to increases in house prices in surrounding locations, thus contributing to the declining overall affordability of homes for genuine house buyers.
In January this year, the government imposed a 5 per cent capital gains tax on property sold within five years of their purchase.
What do you think what will happen with this new rules? Do you think property prices will drop ?