Real issues behind home ownership

No need to have a dedicated bank to facilitate loans below RM300,000 as commercial banks can deal with such loans


A SPECIAL bank to facilitate loans for affordable and low-cost houses could ease the financing issue, but steps must be taken to address the core reasons why locals can’t own a home.

An industry expert from the industry said the establishment of such bank is “doable if it is established under the government”.

“However, a large amount of fund is needed to build and sustain the special bank’s business. It would be a better approach for the government to be involved in some form of guarantee schemes to facilitate buyers,” the industry expert told The Malaysian Reserve.

The expert said it is more crucial to look at the bigger picture behind the housing crisis.

“We don’t need to have a dedicated bank to facilitate loans below RM300,000 because the commercial banks we have at the moment can deal with that much of loans. But, the banks have their own risks assessment and we have to look at the reasons why banks are not approving the loans,” the industry expert said.

A special bank to finance homes costing RM300,000 and below has been proposed by Barisan Nasional as part of its manifesto.

Housing has become an issue for the country’s over 31.5 million population.

The monetary authority claims developers are building homes which are beyond the means of many Malaysians.

Property developers claimed that the strict lending ruling — especially the income ratio to borrowing, introduced to curb the rise of household debts — had dented the prospects of many from being eligible for mortgages.

Affordability of homes has been blamed on the slow rise of wages and rising debts.

The monetary authority continues to remind the need to prevent a financial meltdown during economic shocks and excessive lendings to those who are not able to repay their debts.

Lenders’ non-performing loans have been thinning in the last few years due to their strict-risk assessment.

As at the end of February 2018, the value of loans for residential properties was RM526.9 billion of the country’s total RM1.59 trillion lending.

Bank Negara Malaysia said in a statement in July 2017 that access to financing is not the primary issue for affordable housing.

It said eligible home buyers will continue to have access to financing.

In the first five months of 2017, RM40 billion of housing loans were approved to more than 152,000 borrowers — three quarters of these borrowers were first-time house buyers.