Leverage ratios are particularly high among lower-income households.“For example, those earning less than RM3,000 per month have debt equivalent to around 7x their annual income, compared with three times among higher-income households. Many households could struggle to service loans at such high interest rates.“The systemic risk posed by the scheme will ultimately depend on the willingness of property developers to take part, and on the market's willingness to fund developers. Large developers are likely to be cautious. They have no access to credit bureau data, which will make it difficult to assess the creditworthiness of borrowers.“Furthermore, their core business has proved profitable in the last few years, and any move into lending would leave fewer resources available for property development. However, weaker developers could be tempted to lend in order to ramp up property sales,” it cautioned.

Source: The Star September 15, 2016 04:38 UTC