KUALA LUMPUR (REUTERS) - Malaysia's central bank on Friday reduced the length of mortgages and consumer loans, some which run to 45 years, in an effort to curb runaway household debt levels.
Effective immediately, mortgages will be capped at 35 years and personal loans at 10 years, it said in a statement.
Mortgage tenures of up to 45 years have been common in the country. Supported by rising incomes and low unemployment, household debt in Malaysia has grown at around 12 per cent annually each year since 2008. In 2012, household debt rose to 80.5 per cent of gross domestic product.
"There has been a growing trend in the offering of financial products that are not in the long-term interest of consumers," the central bank said.
It will step up efforts to educate young and first-time borrowers to ensure responsible debt management, the bank said.