Gerakan has welcomed Bank Negara’s decision to implement the maximum 70% loan-to-value ratio for third homebuyers, describing it as a good move as it can control houses prices and reduce speculations.

Gerakan vice-president Datuk Mah Siew Keong said the new ruling would also be able to decrease household debt level in Malaysia, which is the highest in Asia, accounting for 76.6% of gross domestic product (GDP) in 2009 and 78.1% GDP in end-August 2010.

“With the need to pay upfront 30% of the purchase price of a house, we expect a decrease in demand for houses by speculators and this will slow down escalation of house prices,” he said in a statement.

Mah, who is also the party’s chairman of Economic Development Bureau, said the low and middle-income groups would not be affected.

“It is important that the government must prevent the housing market from overheating,” he said.

He said the new ruling is also in line with Budget 2011’s 100% loan My First Home Scheme, to encourage home ownership among Malaysians, especially the lower-income group.

Mah said whatever preemptive steps to be taken, there must be due considerations on the overall impact on the economy and the people, in particular the lower income group.

Bank Negara has announced with immediate effect the implementation of a maximum loan-to-value (LTV) ratio of 70% for people buying their third or more house, meaning those wanting their third property onwards have to come out with their own cash amounting to 30% of the value of the house.

The move is aimed at supporting a stable and sustainable property market while promoting continued affordability of homes for the general public, the central bank said in a statement.

“Financing facilities for the purchase of first and second homes will not be affected by the policy,” it said, adding that such borrowers will continue to be able to obtain financing for these purchases at the present prevailing LTV level applied by individual banks based on their internal credit policies.