Rising Household Debt Case Study

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4.0: Causes of Rising Household Debt in Malaysia 4.1 Malaysian Government Policy A house is one of the basic important elements that complement the needs of human life. The government has a responsibility in providing quality housing and affordable housing for the citizen. (Hadi, 2014) Nowadays, Malaysian Government has introduced various housing policies and programs. Malaysia government encourage young adult to own a home. Government have offer ‘My First Home Scheme’ (SRP) which is the scheme allows home buyers to obtain 100% financing from financial institutions, enabling them to own a home without having the need to pay a 10% down payment. This attract the more people to borrow properties loans to own a home especially young adult.…show more content…
For example, property buyers will no longer have the option to take loans for longer than 35 years. Anyone taking a personal loan can now only do so for a period of up to 10 years. These are new rules set by Bank Negara with the aim of helping to reduce household debt in the country. It will causes the household not buying the property due to the term of the loan reduce and they cannot afford the larger amount monthly repayment. Before the new rule, property buyers could take loans for up to 45 years, while personal loans could be paid back over a period of up to 25 years. (Chong, 2014) Also, government need to tighten the rules of car loan which is reducing the term of the loan and increasing the deposit. This will causes people not willing to borrow and it will decreases the household debt in Malaysia. It is because housing loan is the biggest portion of the household debt in Malaysia, followed by the motor vehicle

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