Malaysian Retail Credit Bubble On The Horizon?

Article today from TheStar on a possible retail credit bubble in Malaysia. I never seen this type of cautious reporting on credit bubble prior to the 2007-2008 bull market. It is possible that a lot of Malaysians are taking the opportunity of low interest rates to borrow credit for their own needs particularly to do property purchases. It is not unusual nowadays for individuals to have an excess of RM500K or more in personal debts.

The public and analysts are very optimistic on the property prices as evident with quick sold out of new developments in major cities like KL & Penang where properties are selling like hot cakes on the 1st day of sale. Certain parts of KL are fetching prices like RM400-800 per square feet for an apartment where as Penang is reaching ~RM300 per square feet according to numerous blogs/forums today.

My take is that interest rates will further increase soon as inflation sets in unless something real big downdraft happened in the United States. So far, jobs are sufficiently ample and salary wages are on the rise for those who jump ships to other companies.

Partial Article From TheStar Today,

Based on Bank Negara’s latest data released yesterday, outstanding loans to households grew by 12.9% on an annual basis as at end-June, outstripping outstanding loans to businesses which expanded by 7.2%.
From January to June, household loan applications totalled RM159.9bil with approvals at RM88.4bil while business loan applications were lower at RM131.6bil with approvals at RM72.3bil.
As at last year, household debt in Malaysia stood at 77% of gross domestic product – the highest in Asia. This compares with 64% in 2008