BNM: Access to financing is not primary issue for affordable housing

KUALA LUMPUR: If the issue of affordable housing is to be resolved, all parties must be clear on the root cause of the matter and honestly strive to help those affected by it, says Bank Negara Malaysia (BNM).

BNM said in a statement this is with reference to media reports on calls to review the housing loan criteria for potential buyers of affordable houses.

“The comments made by some parties has caused confusion and were not based on facts and accurate information,” it said, adding, eligible home buyers will continue to have access to financing.

BNM said in the first five months of 2017, RM40 billion in housing loans were approved to more than 152,000 borrowers, and three quarters of them were first time house buyers.

“The approval rate for housing loans has also been stable at 74 per cent,” said the central bank.

Banks have also introduced more flexible financing solutions to improve affordability, such as that offered for Perbadanan PR1MA Malaysia homes.

BNM said outstanding housing loans continued to outpace overall loan growth, increasing by 8.6 per cent year-on-year to RM493 billion as at end-May 2017.

The responsible financing guidelines are in place to protect the interest of borrowers by ensuring that those who borrow are within their capacity to honour the financial obligation, it said.

“Financial institutions will offer financing to all eligible borrowers and only reject loan applicants who are clearly over-extended in terms of the ability to take on more debt and have an adverse credit repayment history.

“It is worth reminding that the core business of banking institutions is to provide financing.

“Based on engagements with banking institutions, rejected housing loans mostly involved borrowers with high levels of pre-existing debt obligations that would expose them to severe financial risk if further debt is extended,” BNM added.

The central bank said for such borrowers, the risk of foreclosure is significantly higher and they are much more likely to fall into financial hardship in the event of income shocks or large medical expenses.

According to BNM, solutions to affordable housing need to address the shortage of affordable houses and the high house prices relative to income.

Based on the National Property Information Centre’s data, less than 30 per cent of new housing launches in 2015-2016 were for those priced less than RM250,000, compared to 70 per cent during the 2008-2009 period.

Housing affordability has not improved significantly where average national house prices remained at 4.4 times of median income (affordable range is 3.0 and below), with lower affordability recorded for some major states and urban cities.

Housing developers, working together with authorities and relevant stakeholders, should therefore intensify efforts to reduce costs and accelerate supply, said BNM. — Bernama