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The Effects of MCO on Housing Loans

  • 2021-07-16 11:17:46

Credit: Malay Mail

In order to live in a space we can truly call home, we often look towards the idea of securing loans from banks to help tackle the issue of insufficient funding. However, with the increasing severity of the COVID-19 pandemic, the MCO has been set to restrict movement, causing disruptions in all aspects of life, including the processes of securing housing loans.

We understand the disappointment and turmoil you’re experiencing, but that’s why we’re here to help address some uncertainties that you might have. Read on to find out more about the effects that MCO has on housing loans in Malaysia.

Bank Negara Malaysia Extends Its Loan Moratorium

Credit: BNM

You’ve got your crosshair on that dream home; you’ve got the financial capability to afford it. Life’s good and you’re ironically excited to finally spend most of your lifetime savings on housing loans, all for that home you’ve always wanted – until disaster struck as COVID-19 presented itself.

Well, luckily for homebuyers, Bank Negara Malaysia (BNM) recently announced that starting from 7th July 2021 onwards, a further extension on the loan moratorium will be given to provide further financial relief. This basically means that homebuyers in search of housing loans can repay their loans in a slower pace, which definitely helps to ease the financial burdens brought upon us by the pandemic. Besides, most Malaysians will automatically be able to quality for this loan moratorium.

Increased Rate of Loan Rejection by Banks

Credit: Lamudi

Being able to afford your very own home is undoubtedly a milestone worth celebrating. For many, this officially marks the start of adulthood, and along with it comes financial independence. Having said that, it is quintessential to study and understand every nook and cranny regarding homebuying, especially if you’re a first-time homebuyer in Malaysia.

However, due to the implementation of the MCO, being financially stable might not even suffice anymore. In the near future, loan approvals will become more and more difficult to obtain. This can already be seen during this MCO, as banks are really starting to tighten their already strict lending policies.

During these difficult times, banks are fighting hard to sustain themselves and stay afloat. This makes them very cautious of borrowers that may not be able to repay their loans, due to the dwindling economy. Even if you have a strong credit rating, some banks are likely still going to play on the safe side and reject your loan application, for fear of the unknown.

Economic Deflation Poses Difficulty in Loan Repayment

Credit: Smart Precise Solution

Housing schemes are programs aimed at helping homeowners secure a place to call home. In Malaysia, there are a handful of housing schemes and they each have different sets of criteria and requirements. Homebuyers are typically required to make a 10% down payment for the home they wish to finance. However, a first-time homebuyer can reach out to government schemes that are readily available, to suppress the financial burdens of homeownership.

With that said, in these uncertain times, the road ahead looks bleak and nothing is promised. Even if you’ve successfully secured a housing loan, financing for that loan for the next few years is going to be a tough uphill climb for most of us. Due to the MCO, industries aren’t able to conduct works and thus become inefficient at producing and supplying.

When there's less productivity in the workforce, earnings would be significantly reduced, not just on a personal level, but on a national level as well. This would inevitably impact the economy negatively, thus causing an economic deflation which makes it difficult to be financially sustainable. As such, having to repay a housing loan would be a heavy burden added onto your already weary shoulders.

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