KUALA LUMPUR (Feb 27): The national household debt, which stood at RM1.63 trillion as at end-December 2024 — equivalent to 84.2% of gross domestic product (GDP) — was much lower than household financial assets, according to the Ministry of Finance (MOF).

The ministry said household financial assets totalled RM3.4 trillion, equivalent to 178.2% of GDP, at the end of last year.

“Banks’ prudent lending standards, based on the Policy Document on Responsible Financing implemented since 2012, continue to play an important role in ensuring that household indebtedness is manageable and in line with repayment capacity,” the MOF explained in a written response published on the Parliament website on Wednesday (Feb 26).

It was responding to a question from Datuk Dr Nik Muhammad Zawawi Salleh (PN-Pasir Puteh), who sought to know what steps the government is taking to assist one-third of households in Malaysia that have a debt service ratio (DSR) exceeding 60%, and are vulnerable to bankruptcy risks in the event of interest rate increase, job loss, or inflation.

The MOF said that through the implementation of this policy document, the DSR for households remains at a prudent level, with a DSR median of 34% for outstanding loans and 41% for newly approved loans as at end-December 2024.

According to the MOF, the government and Bank Negara Malaysia (BNM) continue to take a prudent approach in managing household debt risks, to ensure it does not negatively impact household resilience and the stability of the country's financial system.

“In addition to the implementation of the Policy Document on Responsible Financing, continuous efforts also include enhancing financial literacy through the Financial Education Network and Financial Literacy Month, as well as loan repayment assistance through financial institutions, and the Credit Counseling and Debt Management Agency (AKPK), especially for borrowers with a high DSR,” it said.

The ministry added that to control debt growth, the government ensures that housing remains affordable through programmes such as the People's Housing Programme and PR1MA, in addition to strengthening the public transportation system to be more efficient.

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