The Malaysian consumer lending market is expected to register slowdown in 2020 amidst the coronavirus (COVID-19) outbreak, as per the latest revised post-COVID-19 data published by GlobalData, a leading data and analytics company.

An analysis of GlobalData’s Global Retail Banking Analytics reveals that consumer loans, which registered a healthy compound annual growth rate (CAGR) of 5.9% between 2015 and 2019, is expected to decelerate to 2.4% in 2020. Similar to most countries across the world, the COVID-19 outbreak shook the Malaysian economy and in turn affected the consumer lending market.

Shivani Gupta, Senior Banking and Payment Analyst at GlobalData, comments: “New loan applications will also see a drop as consumers become more cautious about taking on additional liabilities due to economic uncertainty. Consumer spending is affected as wary consumers stay at home and cut down on large value purchases.”

Mortgage loans, which account for the largest share of consumer loans in Malaysia with almost 60% share in 2019, are experiencing mounting pressure on supply and demand. Consequently, a wait-and-see approach is prevalent, as both buyers and sellers have become more vigilant amid the outbreak. To reflect this, GlobalData has revised its forecasts for mortgage balance growth to 2.2% for 2020, compared with the previous forecast of 7.9%.

The central bank’s announcement of the automatic six-month loan payment deferral for existing loans (including mortgages) will, however, provide some relief to individuals affected by the COVID-19 outbreak.

Shivani concludes: “The COVID-19 pandemic has had a major impact on the local economy. The recent government measures, including reduction in lending rates, will lower loan repayment costs for borrowers. However, it may not be sufficient in encouraging consumers to take any new loans.”