Malaysia Housing Finance Market

The private sector plays a dominant role in development in Malaysia like Commercial Banks (Conventional and Islamic Banks).

Development Financial Institutions and Others for example Insurance Companies, Co-operatives, and Developers.

The banks remained the largest lenders in the Malaysia housing finance market, as of the end of 2017, out of RM817.3 billion of banks’ exposures* to the property market, 90% is related to the purchase of residential and non-residential properties.

The government’s Policy is based on increasing the supply of housing to the market, providing adequate, affordable, and quality houses, enhancing accessibility to housing finance supply, and encouraging home ownership.

The objective of housing policy is to increase accessibility to adequate, affordable, and quality houses, actively promote home ownership since the 1970s, especially among the lower and middle-income groups.

Over the years, the Government continues to introduce new measures to facilitate the Malaysia housing finance market and also to curb house price speculations.

To achieve the national objective of promoting house ownership, the potential buyers of houses need to have access to housing loans at a reasonable cost.

The primary lenders in the Malaysia housing finance market, i.e. the financial institutions that provide the mortgage loans to the house buyers, can continue to provide such loans only if they themselves have access to funds at an economical cost and for a longer tenure than their usual short-term deposits.

One way to cater for the needs of the financial institutions is to make their housing loans self-financing or be the basis for raising longer term funds.

Also read: 5 Affordable Housing Malaysia Schemes to Apply (2023)