Mortgage approvals decline amid tighter borrower and valuation checks
JLL Malaysia expects full-year approvals to stay muted, citing closer bank scrutiny of income records, inflated property prices and service apartment vacancies.
Malaysia’s housing loan approval rate slipped to 38.36% in September 2026 as lenders became more selective, according to JLL Malaysia. The firm compared this with a baseline range of 40% to 41% maintained between 2022 and 2025.
At the firm’s 4Q2026 property market briefing, managing director Jamie Tan said full-year approval figures were expected to stay muted. Banks were examining applicants’ creditworthiness more closely, alongside the location and project for which financing was sought, he said.
JLL Malaysia attributed the slowdown to stricter checks on income documents, inflated transaction prices and vacancy risks involving service apartments. Its executive director and head of retail valuations Jeannie Tan said banks were increasingly cautious about buyers seeking cash-out financing.
She described arrangements in which a property’s sale and purchase agreement (SPA) records a price exceeding its assessed market value to obtain more financing. Valuers appointed by lenders were flagging the discrepancies, she said, adding that borrowers remained responsible for repaying the additional funds.
Jeannie also pointed to lending caution towards densely built service apartment projects in the Kuala Lumpur City Centre aimed predominantly at foreign buyers. She said high vacancies could push owners towards short-term letting, while dependence on such rentals indicated weaker long-term tenancy and less stable occupancy.
Jamie warned that unchecked residential building could leave certain areas with severe supply imbalances in 2027. With housing accounting for roughly 62% of Malaysia’s property market, he said instability in the segment could have lasting consequences.
