- 2 weeks ago
This discussion focuses on why Malaysia is considered a relatively borrower-friendly mortgage market, what that means for home affordability, and how first-time buyer incentives fit into the bigger housing picture.
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00:00Malaysia might be feeling the cost of living squeeze but on mortgages, Malaysians are quietly
00:14winning big. A new six-country comparison shows Malaysians can save more than $200,000
00:19over the lifetime of a typical home loan, making Malaysia the region's most borrow-friendly
00:24mortgage market. Here's the punch. On a 30-year, 200,000 loan, Malaysians pay about RM173,419
00:32in interest, while a similar buyer in Indonesia pays RM378,292. That's RM204,873 more than
00:43the same-size mortgage. And definitely, we have our expert here on the line to help us understand
00:47on the property market, especially for Malaysian market, is UIIQI co-founder and group chief
00:53executive officer Kashif Ansari. I want to say thank you very much, Kashif, for joining
00:57me. Definitely, at end of year, we want to take a look at all aspects of economies and
01:02we'll take a look at real estate in Malaysia. And your report says Malaysians can save up
01:06to RM204,000 over the lifetime of a mortgage compared to other ASEAN buyers. How representative
01:13is this figure for the average Malaysian today, especially urban buyers purchasing homes above
01:19RM500,000 where prices are much higher, are we truly saving or are we simply paying less
01:25interest or much more expensive homes? Hello and always a pleasure to be here. I think
01:32that's something really interesting. And the good part is Malaysians need to understand how
01:38you know, like blessed they are when we compare to the market, what good opportunity they have when
01:45it comes to investment and real estate investment. So what we have done is basically taking an average
01:51out, you know, like if you are buying a house of 200,000 and take the mortgage, how beneficial for
01:56Malaysian to buy a house? You know, like the other thing to do this exercise was to, there's a lot of
02:04misconception in the market where they say like, do we, especially the first time home buyer, do I
02:09go for the mortgage? Is the interest rate high or low? But what we are trying to tell overhead, market
02:15is the most attractive at the moment. And this is something really attractive. So another thing, you
02:21know, like by comparison, and this is something really interesting when you play with the data and the
02:27numbers, imagine in Indonesia, you pay 1.9 ringgit in interest over 30 years for every one ringgit of
02:35the home. So basically, you're paying three home for that compared to Malaysia is only 0.9 ringgit less
02:43than a ringgit in interest for over 30 years. So what we are trying to tell to the buyers is like so
02:49affordable, so achievable. And I think that the in Malaysia, if you take a loan, I think it's very
02:55productive. So whatever you'll pay less in Malaysia compared to the, and this, we want to encourage the
03:01first home buyer, go for it. I think you're so blessed. I think this is a good time.
03:07Definitely looking at this data statistics, the number probably more buyers are more confident
03:12to purchase house mortgage in Malaysia. And Malaysia may be borrower friendly in terms of interest rates,
03:19but household debt to GDP is already above 80%. Does this suggest Malaysians are financially
03:25advantage or does it mean we are becoming more comfortable carrying long-term debt because
03:30borrowing feels cheap? Interesting. And that, you know, like when the 80% comes up, everybody
03:37blows up and get worried. I think the most developed nation, this is quite normal. And I think this is,
03:43this shows that, you know, like it's being the mature market. What Malaysia, especially Bank Negara,
03:50is focused on is debt service ratio, which called DSR. I think this is something we need to understand.
03:57That means that they don't limit total debt, but they don't try to make sure they may try to make
04:02sure that the borrower can afford it. And I think this is something was one of the reason, you know,
04:08like if you look into the mortgage in Malaysia, there is most people successfully repay their loan.
04:14That is something really good. So we don't have to worry. And then the market and the banks are also
04:20looking into that. Secondly, you know, like always remember, this is something another interesting
04:25household asset is 2.1 times higher than the total debt. So what does mean that every dollar that
04:33household owed to the bank, they have asset worth more than $2. So it's quite secure. So, you know,
04:39like when you look at the mortgage, whether 80% debt, definitely there is a huge asset sitting on
04:46it. And that's how the Malaysia we feel, you know, like there is nothing to worry about. And I think
04:51it's, it's quite strong, uh, situation. And also the comparison is based on a 30 year,
04:59200,000 ringgit loan, but many Malaysians now take 35 until 40 year tenures or refinance multiple times.
05:06When we factor in longer loans durations and repeated refinancings,
05:10are borrowers generally saving money or just spreading repayments over a longer period?
05:16It's a good question. Uh, so if you look at the ASEAN now, Thailand had come up with even the 50%
05:22mortgage time, but answer to your question and for journal, all the public, when you go, the best way
05:28to pay less interest is to pay your loan off early, not to take additional loan or to refinance,
05:35to take equity out of the property. Some people have the risk tolerance and then repeatedly refinance
05:40and take capital out. That's their choice. Longer loan terms refinancing mainly improve the cash flow.
05:46And you know, that's the reason, you know, the longer I have to pay less installment,
05:51but technically you're paying higher interest. So what we discussed about 0.9, you know that earlier,
05:58that's how you benefit. So if you take a loan on the house, you just make sure that you pay off
06:04and don't increase that. So then it's something feasible for you when you invest in the property
06:10or the real estate. Even longer tenure refinancing, uh, they, it's a good, uh, making home financing
06:18here, but, but I think, uh, people, they definitely benefit from that. Also you attribute Malaysia's
06:25mortgage advantage to strong governance, EPF and liquidity and transparent pricing. How resilient
06:31is this advantage? If EPF withdrawals rise, banks tighten, lending or global financial conditions
06:37worsen. Is Malaysia's borrower friendly position structural or heavily dependent on the current
06:42policy conditions? Help us understand on this. EPF is a structurally great advantage for Malaysia.
06:52Amazing numbers. So what we have seen the whole, the track record, uh, it means, uh,
06:57Malaysian economy is, is doing good. And the kind of structure EPF has given to the Malaysian economy
07:03and the structure is, uh, so obviously we all want economic growth to continue at a rapid pace,
07:09you know, like, uh, the advantage of having strong governance is that when the economy slows
07:14and the system continue to work well. And I think we have seen in 2000, 2008 global financial crisis,
07:20the Malaysian real estate market, we don't have those kinds of situation. What we have seen in West,
07:26this shows the Malaysian infrastructure or the structure when it comes to financing and borrowing,
07:32the banking is quite strong, which gives a really strong signal. EPF, one more thing, you know,
07:38Bank Negara has, uh, uh, clearly mentioned that they have enough assets to withdraw. So where,
07:45when they allow people to take withdrawal, I think it's, it's okay. It's definitely supposed that
07:50secondly, you know, like gig worker bill 2025, bringing more funds into, uh, EPF. And now,
07:57you know, like even the workers. So this is, you're talking about 1.2 new people coming into EPF,
08:04more funds, more liquidity. So I think EPF is a strong, their asset back is quite strong,
08:09their numbers, their investment is everything quite structured. So, uh, this is, I think it's a good,
08:15it's a positive, nothing which where, you know, like any signals are going on. Good sign.
08:20Uh, all right. Um, we're also going to take a look on the incentive or also the policy, which also
08:26involves stamp duty exemptions and incentive for first-time buyers extended until 2027.
08:34Is that a risk that these incentives are already being priced into higher property values? And once
08:39they expire, demand weakens and buyers are left less protected than they appear today. What's your
08:45thought on this? I don't think seller have the pricing power to force buyer to pay their stamp
08:51duty saving in the higher purchase price. Uh, that would only possible in the market with shortage of
08:57listing, you know, where you have seen, uh, people are bidding for, to get the property,
09:01those kinds of situation. If one seller wants to pay more for their property because of the stamp duty
09:07exemption as a buyer, you can just purchase somewhere else. So when the stamp duty exemption expires,
09:13buyer will have to pay those duties. That's why it's such an effective policy because it saves
09:17buyer money. I think it's, it's, it's a good thing. Um, all right. Um, we want to take a look at the
09:24low borrowing also that costs, costs help everyone, including investors. Do Malaysia's favorable
09:30mortgage condition risk crowding out genuine first-time buyers by encouraging speculative demand?
09:35And should policymakers consider stricter differentiations between owner occupiers and investors?
09:41Uh, I think there's enough supply in the market for everyone. And don't forget the investor typically
09:49have to meet tougher conditions, you know, like the, rather than the first time buyer investor usually
09:54have to have a bigger down payment. Currently you have seen 40% down payment, uh, 60% LTV. So,
10:02and, and, you know, like all those incentives, what the government have given to the first time,
10:07like they don't even qualify or not even, uh, do, uh, for like, which has support for them. I think
10:14the policies Malaysia has set up and the kind of real estate is quite productive and there is no sign,
10:21no room for speculators to come in. That's the reason the Malaysia real estate market has performed
10:27quite good and it's a mature market. That's what we are seeing. The growth is, uh, you know,
10:31it's stable. We are not seeing what happened in Dubai or Hong Kong where the price shoot up so high.
10:38I think this gives the confidence to the Malaysian when it comes to real estate investment. This is
10:43stable, mature market and good time to invest. Um, also, um, I want to take a look, uh, are developers
10:51and banks already pricing in investors' demands and does the indirectly raise, uh, entry prices for
10:57first time buyers, even when interest rates are low? I think that this is something which we totally
11:06was expected, right? The interest rate in the future, if you're seeing the interest rate will be
11:11definitely going down, but, but the cost of construction has gone up and, uh, what we are looking
11:17into it, like the construction cost is going up, even the interest rates are while we're going up, but so
11:23like prices will definitely going up in the future. So like what we have to look into that is like the
11:29current, current pricing, whatever is available is, this is the best time to, to get into it because
11:36inflation and it's the target, you know what I think Malaysian investors and buyer, they have to look
11:42into that. We are part of this global community. So the prices are going up globally. It's not about
11:48in Malaysia. So the cost of construction has going up, whether it's, you know, the steel, the cement,
11:54everything. So definitely the prices will go up and then even the interest rate goes down. So you'll
12:00be seeing higher prices. Considering our market condition right now, should Malaysia consider a first
12:06home priority mechanism, like allocations of quotas, belting, owner-occuper, only period for certain
12:13projects or would that eventually a little bit distort the market? I think the policies, the
12:19government is quite focused and they always consider to look for people who are the first time homebuyer
12:25and the kind of incentive has been given to them is quite amazing. So, uh, they're quite protected and,
12:32and you know, like, as I mentioned to you earlier, so not even getting the loan is easier for the first
12:37time homebuyer, they have their policies. So the policy of everyone should get a home. So what we
12:43are trying with, with all this data is like, this is the time you have the right policy, you have the
12:49right product and the interest rate is so good. You are gaining. So, you know, like again, the, the
12:55misconception, like will I, if I borrow a property, if I take a loan, will I be paying two, three houses? No,
13:02you might be doing in Indonesia, but Malaysia is a total different policy. You have first time homebuyer,
13:07your LTV is higher. Your rate is good. You're the, you know, like you can get more incentive. So,
13:13so that's, that's, so I think it's quite protective and it's, it's quite benefit and favorable to first
13:19time homebuyer and for the Malaysians. And also, um, Kashif looking ahead five to 10 years,
13:26what is the biggest threat to Malaysia's borrowers friendly mortgage environment? Rising interest rates,
13:31slower income growth, fiscal pressure or property oversupply? And what should
13:36policy makers fix now to prevent today's advantage from becoming a future risk?
13:43So, uh, what Bank Negara, you know, you have seen their latest report, uh, what they're seeing,
13:48they're seeing two things, uh, what is, can be the worst scenario, which is household incomes goes down
13:56and house prices goes down. This, if two of these things happen, definitely, this is something to,
14:03you don't worry. Uh, the, but they regularly test the bank to make sure their borrower can survive
14:10such a situation. In worst scenario, you know, like for example, one family member might lose their job
14:16because of a recession. Can they still pay their mortgage? Or they have enough money left over for
14:21their other needs? You know, it's not about like pay, uh, paying the installment or the mortgage of the
14:26house. You have a feed, you have to eat, you have to gas, everything is needed. So after the latest
14:33tests, what Bank Negara concluded banks and most household would be able to withstand that they call
14:39severe house price and income shocks. So I think by doing that, uh, Malaysian are quite resilient in a
14:46way like they are quite, uh, they have muscles to, to manage and handle the situation. So until unless
14:53it's the worst scenario, but Malaysia rental, the mortgage situation or what's current situation is,
14:59is quite, quite healthy. And I think that's, that's something quite positive. Um, Kashif,
15:04help us also understand this situation. If rates rise, who breaks first? Be 40 first time buyers and 40
15:12upgradeers or leverage investors. And what's the earliest indicator of stress that we should
15:17understand and establish first? I think the, if you see the stress test, like the Malaysian
15:23overall in general, you know, like it's not about the people who are just taking the loan now. I think
15:29they have, they are sitting on a good asset. So they're trying to understand like, you know, like what we
15:35discussed earlier, the Malaysian have capability of paying their loan back. We don't have that much of
15:42bet that when it comes to property, they have the ratio of 2.1. So their assets are higher. So interest
15:50rate like five to six years, I think going forward, we are seeing that interest rate definitely is going
15:55down. They're not going up. So when the interest rates are going down, uh, this is the time where they
16:01refinance or something, which definitely is, it's, it helps them, but current situation quite healthy.
16:08I don't see there'll be any shock. Uh, interest rates are definitely going down, but it's, it's,
16:13it won't be that much of a concern for when it comes to real estate, but what we are encouraging
16:18over here. And then the message to, by doing all this data in the research is like those people who
16:24have not even the first time home buyer. And then keep on thinking like, I don't have the money.
16:29Is it the right time to do it? I think this is the time where you go out and look for your mortgage
16:34and go for buyer property. What we are seeing in the region. And again, you know, like how our whole,
16:40this report was the ASEAN, Indonesia, Vietnam, Thailand, Philippines, it's much higher.
16:46So you being part of the global family, things are going in that direction. Maybe in 10 years time,
16:54we will be discussing, you know, like it's unaffordable. The new people can't afford the
16:59property. New it's the property price will go up. The interest rate will go higher, but this is the
17:04time where everything helps buyer to get into the real estate market. So I think that's why it's quite
17:10helpful.
17:10And you also mentioned that it's very important to take a look at the data and statistics to
17:15understand the market currently, the market conditions and the direction of the growth. And also,
17:21you also mentioned one of the biggest expert that we also focus is income growth. But in a situation,
17:26in another situation, if the income growth is slow, is the bigger problems, loan affordability,
17:32or is it, it's going to be the house price to income ratios and which should policy target first?
17:38I think the household, the house prices is, is still very affordable and quite decent. I want to use,
17:46I don't want to use the word cheaper, I'd say affordable, the Malaysian real estate market,
17:51the house price is much affordable, much healthy. So there's, there's a room to grow, we are not seeing
17:57anywhere the household, house prices will go down. Because you know, like what we discussed earlier,
18:03that speculation, the speculators are always out from Malaysian real estate market, which helps
18:09Malaysia real estate market very mature and strong and stable.
18:13So any kind of shocks happen, you know, 2008, what happened 8% down compared to the other countries
18:20with 35 to 50% the property price has jumped down, right, fall down. So what we're seeing in like,
18:28from Malaysia real estate market, definitely, we won't see any much kind of shocks. Secondly, what
18:35everyone needs to understand, go to your neighbors and look where they are, their purchasing power is
18:41same like Malaysia, but the prices are 50, 60% higher than Malaysia. So what we are seeing, you know,
18:47like whatever is available for 200,000, 300,000 or 500,000, I think 500,000 in still much, much
18:55affordable and better compared to because of the, because of the policies the government has set up,
19:02they don't bring in speculatory in, which helps all the Malaysian investors, buyer, homeowner to be
19:08protected. I think these things work for sure. All right, that is very comprehensive sharing of
19:15for us to understand deeply on how the market, property sector works on policy, incentive and
19:21understanding more on the markets from various aspects. Maybe I want to add last one Kashif on
19:27oversupply. Is it the total number of units or the mismatch, wrong location, wrong price buy,
19:32wrong time? What is the biggest mismatch right now? What we have seen in from 2024 to last year,
19:42the overhang oversupply is going down, which shows again, the market is getting more mature.
19:47We don't have any kind of that much of oversupply situation currently in Malaysia. The other
19:54interesting part, what we are seeing now, uh, the, the adaptability of the people, you know, like,
20:01people, they, they totally understand it. It's a, it's a human nature, you know, like they were not
20:06ready when the, the prices comes up and they thought like, maybe there'll be some kind of a correction
20:12or maybe be cold and whatever being launched, because, you know, try to understand if a developer
20:17has launched with a certain price, or if I am a buyer and if I want to sell, I have a certain kind of
20:23price, which I want to, uh, liquidate or sell, but I was not getting that. That's where it happens.
20:28Now the situation is quite different. All the properties, majority of them, you have seen those
20:33who have invested and their cashflow was when they borrow the, uh, the rentals has gone higher.
20:39So the rentals going higher, everyone is now who wants to liquidate that because of the rental,
20:46their, uh, installment, the mortgage payment has been taking care, not only taking care,
20:51they're getting extra money out of it. So, you know, like the more rentals are going up,
20:55uh, and this, and I think to conclude something I want to really say,
20:58the Malaysian economy has done amazing. Uh, the new jobs has been created,
21:03the new jobs when it comes to, you know, like where there's data center, tech, realty, uh, AI,
21:09these are the things we are bringing high income people, whether it's Malaysian, whether there are
21:14foreigners. So it's all that boils down to, you know, like the investor on the real estate side.
21:20So this is something also helps the real estate investors. And then, you know, like they,
21:24they are not worried about, uh, you know, like the, they're, they're going more into buying properties.
21:31And I think we are clearing the stock water being there earlier.
21:35All right. Definitely. I want to say thank you very much, uh, to Kashif Ansari for helping us understand
21:41the bottom line that Malaysia is still a borrower, friendly mortgage market. And that's a big national
21:45advantage, not just a personal wheel, personal win. And Malaysia save up to 204,000 ringgit.
21:51And this advantage must do the right job, help real families, build a financial independence,
21:56keep the housing market stable and predictable, and make the path to first ownership easier,
22:01including the spot, like the full stamp duty exemptions for first owner. And then we know that, uh,
22:07Malaysian, because it's cheap borrowing starts rewarding leverage and speculation more than
22:11ownership. Then what is now a strength could become tomorrow risk. Again, I would say thank you very
22:16much to Juwai, IQI co-founder and group chief executive officer Kashif Ansari. Definitely all of our
22:21discussion here will be featured in astrooney.com and across all social media platform.
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