Access to financing not main problem of affordable housing, says BNM


Access to financing not main problem of affordable housing, says BNM

PETALING JAYA, 21 September: Bank Negara Malaysia (BNM), which shot down a proposal to extend the maximum housing loan tenure to 40 years, yesterday also rubbished claims that access to financing was the main woe for affordable housing buyers.

It instead called for resolution of fundamental issues such as affordability and the shortage of supply of reasonably priced houses.

The central bank said the maximum housing loan tenure of 35 years is more than sufficient for borrowers to settle their housing loans by their retirement age, adding that a longer tenure would further add to the total cost of financing without significant improvements in the affordability of one’s monthly instalment.

Last week SunBiz reported that agencies entrusted with managing affordable housing projects were finding it difficult to sell, because housebuyers were not able to secure loans.

Both the Selangor Housing and Property Board (LPHS) and Perumahan Rakyat 1Malaysia (PR1MA) told SunBiz that they were in discussion with BNM on the matter of financing.

Rumah Selangorku houses are priced up to RM250,000 each, while PR1MA homes are going for up to RM400,000.

The central bank, however, looks to be firm on its stand of sticking to responsible lending guidelines.

BNM said responsible financing guidelines serve to protect individuals’ interests so they borrow within their capacity to repay the loans throughout its tenure.

“This is to prevent borrowers from falling into financial hardship due to an excessive debt burden that may lead to foreclosures which will undermine the objective of house ownership,” the central bank said.

BNM cited outstanding housing loans figures as at July 2016 growing 10.1% year-on-year, totalling RM460.2 billion.

It said about 75%, or 1.5 million borrowers, with housing loans are first-time housebuyers.

The statement was silent on a recent proposal by the Urban Wellbeing, Housing, and Local Government Minister Tan Sri Noh Omar to allow housing developers to lend to housebuyers to make up for a “ gap” in end-financing offered by banks.

Real Estate and Housing Developers Association Malaysia recently stated that most banks are giving 75% to 80% end-financing currently.

Association of Banks in Malaysia (ABM) and Association of Islamic Banking Institutions Malaysia (AIBIM) in a joint statement yesterday said a recent survey showed that the top reasons for rejection of home financing applications are applicants having a high debt service ratio; an adverse credit history; insufficient income; and weak documentation/banking records to support the application.

Generally, an evaluation of any application for financing would be based on how an applicant matches up to a set of criteria encompassing five broad areas namely – character, capacity, collateral, conditions, and capital.


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