Post date: Sep 08, 2010 11:8:41 AM
Wednesday September 8, 2010
PLAIN SPEAKING
IN its moves to cool some areas of the consumer loans segment, the banking community has to be cognisant of the need to be flexible and sensitive to the needs of genuine housebuyers.
A bit more work is required to sieve out especially the first time buyers and the second or third time investors for whom some limits may be applied.
First time buyers tend to be the occupants as well although some may still turn out to be investors while staying at their parents’ homes for convenience.
Generally, the principle should be to encourage first time home ownership especially among the younger population who like to secure a plot of their own in the bustling Klang Valley.
It also gives them a chance for future capital appreciation as awareness of making good initial purchases is nowadays emphasised as early as in the classroom.
Many schoolchildren attend courses in financial freedom and learn of the need to grow their money early in order to, among other things, retire comfortably.
However, reports of house prices going by 20% to 30% in certain areas have sparked concerns of a potential bubble in pockets of the property sector.
There are banks that have realised the problem and kept property loans growth at a moderate pace; the present dialogue with Bank Negara sets the tone for possible preemptive moves in the coming months.
The need to be flexible also extends to the credit card segment where care has to be taken so as not to dampen spending especially among those that have the ability to repay the amounts outstanding.
Rumours of lower income groups being given large credit card exposure need to be investigated especially as the economy is expected to slow down slightly against lingering concerns over a faltering US economic recovery.
However, when zooming in on the lower income segment, some sense has prevail so as not to cut off their spending power, instead any limits imposed should ensure that credit extended is not in bloated amounts.
Everybody, rich or poor, wants to enjoy a certain level of comfort within his or her capability to repay.
No doubt domestic consumption conditions are still robust and the non-performing loans situation still under control, but review and discussion is still to be encouraged so as to nip any potential problem in the bud.
Facts and figure generally do not lie and often point the way for further necessary actions.
·Senior business editor Yap Leng Kuen reckons nobody likes to be lectured and reminded that one needs to spend within one’s means.