Govt talking to BNM to ease home lending rules, Noh says

We hope to conclude a win-win understanding with BNM soon, the minister adds


The Urban Wellbeing, Housing and Local Government Ministry (KPKT) is discussing with Bank Negara Malaysia (BNM) to relax the lending policies governing house purchases, especially for first-time buyers.

KPKT Minister Tan Sri Noh Omar said open discussions with several agencies, especially BNM, have been conducted recently to discuss ways to address end-financing issues.

“One of our suggestions is for the central bank to consider more lenient terms and conditions for loan applications to buy first homes.

“However, we are still at the negotiation stages. We hope to conclude a win-win under- standing with BNM soon,” he told reporters at the 20th National Housing and Property Summit 2017 in Petaling Jaya yesterday.

Noh claimed that the central bank is open to the idea, as BNM’s recent data showed approximately 70% of the total loans approved to date were for the affordable housing segment.

He also said championing home ownership remained KPKT’s main focus for the upcoming Budget 2018, in accordance with the government’s mandate to achieve one million affordable housing supplies over the next few years.

KPKT has achieved 75% out of the total target, with approximately RM700 million worth of investments spent on affordable housing development under the People’s Housing Programme (PPR).

“I expect more allocations to be given for housing schemes under my ministry as they are aligned with the government’s agenda to boost home ownership in the country, particularly for first-time homebuyers in the affordable housing bracket,” Noh said.

Despite the many requests for lenient rules on housing loans, the central bank has been adamant that such a move could create financial instability.

BNM on Wednesday brushed aside demands by investment banks that wanted the Broad Property Sector

(BPS) guideline to be scrapped. The central bank said such suggestion is “taking a short-term view and should consider the long-term systemic implications of an overexposure to the property sector, and not just focus on their commercial gains.

“We should not be oblivious to the many lessons learnt from the Asian and global financial crises,” it added.

The BPS guideline was introduced in 1997 to avoid over concentration of credit exposures to the property sector.

“The guideline, therefore, is still relevant in curbing excessive systemic exposures to the sector, complementing other existing regulations.

“Banking institutions should always be mindful of current property market conditions and not contribute to a situation where there is a mismatch between supply and demand,” BNM said.

Meanwhile, Noh said the surplus of high-end properties is partly due to the buyers and supplies mismatch for that segment.

He said more efforts are required from private developers to build more affordable homes for the middle 40 (M40) group.

Noh also said the ringgit’s depreciation, tightening of lending rules and efforts to curb speculative activities have pushed down property prices across the country, adding that private developers should continue to build homes for the M40 income group.

According to the ministry’s data, as at June 30 this year, a total of 184 PPR projects were planned and 118 of these projects were completed, offering 83,380 houses for the below 40 group.

The average cost for each unit ranges from RM130,000 to RM180,000, amounting to RM12 billion in value.