What changed in Malaysia’s household debt from end-2023 to June 2024?

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Household Debt Shows Slight Increase, Remains Prudent

Malaysia's household debt saw a marginal rise, reaching RM1.57 trillion by the end of June 2024 from RM1.53 trillion at the close of 2023. This increase positions the debt at 83.8 per cent of the Gross Domestic Product (GDP) as of June 2024, a slight decrease from the 84.2 per cent recorded in 2023. Despite this growth, the overall debt service ratio (DSR) is reported to remain at a prudent level, indicating that borrowers are managing their repayment obligations effectively.
Composition of Household Debt

The structure of household debt remains dominated by housing loans, which constituted 61 per cent of the total by June 2024. Vehicle loans followed, making up 13.5 per cent, with personal financing accounting for 12.4 per cent. Other categories, including loans for non-residential property, credit card debt, and securities, comprise the remaining portion. This distribution highlights the significant role of mortgage and vehicle financing in the overall household debt landscape.
Debt Service Ratio Stability

The debt service ratio, a key indicator of a borrower's ability to manage debt repayments, has remained within prudent limits. At the end of June 2024, the median DSR for all outstanding loans stood at 35 per cent. Furthermore, the median DSR for newly approved loans was recorded at 41 per cent during the same period. These figures suggest that, on average, borrowers are not overextended in terms of their repayment capacity.
Regulatory and Awareness Initiatives

In response to the dynamics of household debt, the government continues to implement the 2012 Policy Document on Responsible Financing. A significant legislative effort underway is the push to table the Consumer Credit Act, which aims to regulate non-bank credit providers, including Buy Now Pay Later services. This regulatory measure is intended to mitigate the risks of excessive indebtedness, particularly among younger and lower-income borrowers. Additionally, ongoing public awareness programmes and financial literacy initiatives, such as the annual financial literacy month in October, are conducted to encourage sound financial decision-making.

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What changed in Malaysia’s household debt from end-2023 to June 2024?

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