Economic Report 2019: Half of RM1.16 trillion household debt is housing loans

PETALING JAYA (Nov 2): The overall household debt level stands at RM1.16 trillion – about 83.8% of gross domestic product (GDP) as at end-June 2018, said the Ministry of Finance (MoF) in its Economic Outlook 2019 report.

The debt level has been moderating since 2015 following macro prudential measures implemented to rein in household debt levels, MoF said in the report.

The bulk of debt comprises loan for purchase of residential properties (53%), followed by personal use (14.4%) and passenger cars (13.8%).

Meanwhile, total household financial assets remain strong at RM2,458.4 billion. The debt servicing capacity of household remained intact, supported by stable income and employment growth.

“Given the stable employment rate (national unemployment rate remained at 3.4% in the first half 2018) and income, the household debt level is expected to remain manageable in 2018 and 2019,” stated the report.

Malaysian banking sector activities remain resilient in the first seven months of 2018 with all financing indicators expanding.

According to the report, loan applications, approvals and disbursements increased by 5.7%, 5.1% and 7.3% to RM505 billion, RM223.1 billion and RM678.8 billion respectively.

Meanwhile, total loans outstanding expanded 5.3% to RM1.63 trillion as at end-July 2018.

“Lending to household continued to record firm growth with loan disbursements increasing significantly by 13.2% to RM191.7 billion in the first seven months of 2018.

“Loans disbursed to the household sector were mainly for consumption credit which totalled RM90.4 billion (47.2%), followed by residential properties at RM49.9 billion (26%) and passenger cars at RM22.8 billion (11.9%),” read the report.

As at end-July 2018, total household loans outstanding expanded 6% amounting to RM936.7 billion, accounting for 57.4% of the total loans outstanding in the banking system.

Banking system: loans outstanding by sector (end-July)

* Non-SMEs refers to large corporations, including foreign entities, other domestic entities, Government and others.

**Including agro-based.

***Total = Business + Households + Other sectors.

Banking System: Loan indicators January-July

Source: Bank Negara Malaysia

*Includes foreign entities, other domestic entities, Government and others.

**Total may not add up due to rounding.