Household debt to GDP ratio falls slightly to 83.2 per cent

Image source: nensuria/Freepik

27 November, KUALA LUMPUR – The household debt to Gross Domestic Product (GDP) ratio falls slightly to 83.2 per cent as at end-September 2018 from 83.8 per cent at end-2017.

Finance Minister Lim Guan Eng said a large portion of the household debt catered for asset accumulation such as buying residential properties (52.8 per cent) and non-residential properties (6.8 percent), as well as investment saving funds (5.7 percent).

He said most individual borrowers boasted a prudent debt level, while the overall Debt Service Ratio (DSR) of accumulated financing was at 32 per cent.

“However, there are still lending segments which have a weak financial position, that is 6.5 per cent of the total borrowers with negative financial margin.

“Most of these borrowers earn less than RM5,000 per month and have a DSR level above 60 per cent,” he said when responding to a question from Datuk Sri Hasan bin Arifin (BN-Rompin) during the Ministers Question Time at the Dewan Rakyat today.

Lim said the measures taken to reduce household debt were based on two principles, namely to nurture prudent credit practices among individuals and financial institutions, and to curtail households from piling up debts.

“These measures have been implemented since 2010 and the government will continue to monitor the household debt level and continue with existing measures to ensure that the household sector remains sustainable and resilient,” he added.

– BERNAMA

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