Household debt driven by housing, vehicle loans, says finance ministry

Household debt driven by housing, vehicle loans, says finance ministry

It says household debt grew following SST incentives and other benefits offered for the purchase of vehicles and homes.

The sales and service tax (SST) incentives offered by the government has led to more spending their money on buying cars. (Bernama pic)
PETALING JAYA:
The finance ministry said household debt to gross domestic product (GDP), which stood at 89% as of December last year, was driven mainly by housing and vehicle loans.

In a written parliamentary reply to Chow Kon Yeow (PH-Tanjong), the ministry said the sales and service tax (SST) incentives and other benefits offered had led to more buying cars and homes.

The SST exemptions on all passenger vehicles have since been extended to June. The Home Ownership Campaign ended on Dec 31, 2021, with substantial savings in stamp duty and tax exemption offered for housing loans.

The ministry said the Covid-19 pandemic and economic uncertainty had made it more difficult for people to service their loans.

Bank Negara Malaysia has taken measures to reduce the financial pressure and ensure these instalments can be sustained for the long term, it said.

The 89% household debt to GDP rate at the end of 2021 was actually a reduction of 4.2% from the end of 2020 when it stood at 93.2%. The household debt rate stood at 82.7% in 2019, 82% in 2018 and 82.6% in 2017.

Yesterday, deputy finance minister Shahar Abdullah advised those with financial planning difficulties to seek counselling from the Credit Counselling and Debt Management Agency (AKPK).

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