Higher NPL level if loan moratorium is not extended to all income groups

Malaysia may record higher non-performing loans (NPL) if the loan moratorium is not extended to all income groups similar to the automatic blanket loan moratorium introduced during the first Movement Control Order in 2020.

The general manager of iProperty.com.my, Shylendra Nathan, said the government and financial institutions should consider extending the loan moratorium to include all income groups.

Nathan said the loan moratorium and loan repayment assistance under the government’s latest financial aid package, Pemerkasa Plus are timely for property owners with existing home loans from the B40 group and those affected by job losses due to the pandemic.

He said these initiatives will no doubt alleviate their financial burdens by allowing them to spend on essential needs such as food, medicine, and childcare.

However, Nathan feels the moratorium should include all income groups and focus on assisting consumers who have been facing financial distress since the start of this year.

“If these affected groups were not given a moratorium, this would cause the bank to register more non-performing loans which will affect their overall profit, besides regurgitating foreclosed properties back into an already stagnant market,” he said in a statement.

Nathan also hopes the government could introduce income tax relief on home loan interest as a way to assist Malaysians who are currently servicing home loans and to provide an incentive to those looking to obtain a home loan by allowing them to save some monies via a tax rebate.

He said this cost-saving policy may encourage first-time homebuyers to jump onto the property ladder, which in turn will spur the local property market.

“This initiative would be a great addition given that the Home Ownership Campaign has been extended until the end of 2021,” he said.

On a different matter, Nathan hopes there would be rental incentives for both tenants and landlords.

He said the sense of uncertainty brought about by Covid-19 has resulted in more people preferring to rent over buying a property.

“As more people are working from home, the need to have a comfortable and conducive living environment is now more important than ever. Renting provides an opportunity for people to save on accommodation costs in the short term. To support this trend, the government could introduce an initiative that provides incentives to first-time and seasoned tenants,” he said.

In order to help landlords, Nathan suggested that the government could introduce income tax reliefs to them for providing rental discounts to tenants.

“We believe these rental initiatives will go a long way in assisting tenants and landlords in facing the impact of Covid-19,” he said.

Source: NST