KUALA LUMPUR, March 3 — Bank Negara Malaysia (BNM), state governments and the banking industry are working together to align the criteria used in approving house financing and to improve the affordability of applicants.
In a statement Thursday, BNM said, the assessments by banks on borrowers were partly to assist them in ensuring that they had the capacity to service the loans throughout their tenure.
This was to ensure that the borrowers could continue to service their obligations and had sufficient financial buffers for living expenses, it said.
“It was also to ensure that the borrowers are able to protect themselves against rising costs and unexpected adverse events including foreclosure of homes.
“The maximum housing loan tenure of 35 years is more than sufficient for borrowers to settle their housing loan by their retirement age,” it said.
The central bank said the financing assessment took into account the applicant’s income after statutory deductions, expenditure on necessities and all debt obligations from banks and non-bank lenders.
“Those who do not have the capacity to own a house may also consider the option to rent,” it said.
BNM said Credit Counselling and Debt Management Agency has been providing advice to the applicants to rationalise their debt levels and educating them on prudent financial management.
“It is important for borrowers to disclose accurate material information with regard to their financial position when applying for house financing to ensure objective assessment by the financial institutions,” it said.