KUALA LUMPUR, Nov 3 ― Malaysian households are expected to remain “prudent” with their borrowing as control measures introduced by Bank Negara Malaysia continue to take effect, said BMI Research today.
In its note on household debt in the region, it said there were increasing signs that countries were beginning to unwind some of the amassed borrowings as economic conditions begin to stabilise.
Citing data from the Bank for International Settlements (BIS), the research house said private debt in South Korea, Asean, Australia, and New Zealand all fell in the first quarter of the year versus the same period in 2016.
“Additionally, Malaysia, which is just behind Thailand, saw its household debt as a share of GDP fall slightly to 68.9 per cent in Q117 from 70.3 per cent in Q416.
“[We] expect pre-emptive macro-prudential measures that have been implemented by the authorities since 2010 to continue to limit the growth in household debt and ensure that it remains at prudent levels,” BMI Research said.
Malaysian household debt is among the highest in the region.
Following concerns over the rate at which local households were amassing debt, BNM began instituting measures to ensure that banks were more stringent when vetting loan applications.
While the measures resulted in complaints that banks were excessively strict with their vetting, data from the Association of Banks in Malaysia (ABIM) showed that application and approval rates remain within industry norms.