Kuala Lumpur

GROWTH in Malaysia's Islamic home loans is forecast by banks to slow from the weakest pace since 2007 as a new tax dampens housing demand.

AmInvestment Bank Bhd and CIMB Islamic Bank Bhd forecast the mortgage market will cool, just as tighter capital rules make lenders more cautious on expansion. The government will introduce a 6 per cent goods and services tax in April, adding to disincentives after regulators cut the maximum tenor on residential property loans to 35 years from 45 in July 2013.