Some already licensed to give loans
The ministry will also ensure the provisions under the Act are not misused,” he said.
Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi had instructed Noh to brief the Cabinet on the initiative after Noh last Thursday announced the initiative to let eligible developers provide housing loans of up to 100% to property buyers, following difficulties faced by buyers in securing bank loans.
The proposal, however, was received with strong opposition by many, including Finance Minister II Datuk Johari Abdul Ghani who said the idea was illogical and unsustainable.
Noh said the idea was not new, and selected developers were already licensed to offer the loans.
Under the initiative, developers will have to apply for moneylending licences issued by the ministry under the Moneylenders Act 1951 (Amendment) 2011, which would allow them to offer loans at an interest rate of 12% with collateral and 18% without collateral.
The Real Estate and Housing Developers Association Malaysia (Rehda) said it is proposing property developers with money lending licences only offer “bridger” loans, which are capped at interest rates below 10%.
Rehda president Datuk Seri Fateh Iskandar Mohamed Mansor said such loans would only be offered to home buyers who have secured loans from banks but were unable to obtain the desired margin of financing.
“Based on feedback from buyers, most banks are giving 75% to 80%.”
Rehda said the interest on such “bridger” loans will not be in the teens and proposed to cap the interest rate at 2% above cost of funding.
“We have cost of funds, so we are looking at anything that is reasonable, 2% above our cost.
“We have cost and risk. This is something we are still talking about and waiting for feedback,” said Fateh Iskandar, adding that the scheme must be realistic and sustainable.
Rehda also proposed to limit the loans to first-time house buyers who are buying homes priced RM500,000 and below.
Fateh Iskandar said the scheme definitely has risks and only developers with healthy balance sheets would participate.