Ac­cess to fi­nanc­ing not main prob­lem: BNM

> Cen­tral bank shoots down longer hous­ing loan ten­ure pro­posal, says 35 years is more than enough

The Sun (Malaysia) - - SPEAK UP -

PETALING JAYA: Bank Ne­gara Malaysia (BNM), which shot down a pro­posal to ex­tend the max­i­mum hous­ing loan ten­ure to 40 years, yes­ter­day also rub­bished claims that ac­cess to fi­nanc­ing was the main woe for af­ford­able hous­ing buy­ers.

It in­stead called for res­o­lu­tion of fun­da­men­tal is­sues such as af­ford­abil­ity and the short­age of sup­ply of rea­son­ably priced houses.

The cen­tral bank said the max­i­mum hous­ing loan ten­ure of 35 years is more than suf­fi­cient for bor­row­ers to set­tle their hous­ing loans by their retirement age, adding that a longer ten­ure would fur­ther add to the to­tal cost of fi­nanc­ing with­out sig­nif­i­cant im­prove­ments in the af­ford­abil­ity of one’s monthly in­stal­ment.

Last week SunBiz re­ported that agen­cies en­trusted with man­ag­ing af­ford­able hous­ing projects were find­ing it dif­fi­cult to sell, be­cause house­buy­ers were not able to se­cure loans.

Both the Se­lan­gor Hous­ing and Prop­erty Board (LPHS) and Peruma­han Rakyat 1Malaysia (PR1MA) told SunBiz that they were in dis­cus­sion with BNM on the mat­ter of fi­nanc­ing.

Rumah Se­lan­gorku houses are priced up to RM250,000 each, while PR1MA homes are go­ing for up to RM400,000.

The cen­tral bank, how­ever, looks to be firm on its stand of stick­ing to re­spon­si­ble lend­ing guide­lines.

BNM said re­spon­si­ble fi­nanc­ing guide­lines serve to pro­tect in­di­vid­u­als’ in­ter­ests so they bor­row within their ca­pac­ity to re­pay the loans through­out its ten­ure.

“This is to pre­vent bor­row­ers from fall­ing into fi­nan­cial hard­ship due to ex­ces­sive debt bur­den that may lead to fore­clo­sures which will un­der­mine the ob­jec­tive of house own­er­ship,” the cen­tral bank said.

BNM cited outstanding hous­ing loans fig­ures as at July 2016 grow­ing 10.1% year-on-year, to­talling RM460.2 bil­lion.

It said about 75%, or 1.5 mil­lion bor­row­ers, with hous­ing loans are first­time house­buy­ers.

The state­ment was silent on a re­cent pro­posal by the Ur­ban Well­be­ing, Hous­ing and Lo­cal Gov­ern­ment

LOAN TEN­URE AND ITS IM­PACT ON FI­NANC­ING COSTS VS MONTHLY IN­STAL­MENTS

Loan ten­ure of 35 years`

300,000 4.65 1,447.77 608,061.73 Min­is­ter Tan Sri Noh Omar to al­low hous­ing de­vel­op­ers to lend to house­buy­ers to make up for a “gap” in end-fi­nanc­ing of­fered by banks.

Real Es­tate and Hous­ing De­vel­op­ers As­so­ci­a­tion Malaysia re­cently stated that most banks are giv­ing 75% to 80% end-fi­nanc­ing cur­rently.

As­so­ci­a­tion of Banks in Malaysia (ABM) and As­so­ci­a­tion of Is­lamic Bank­ing In­sti­tu­tions Malaysia (AIBIM) in a joint state­ment yes­ter­day said a re­cent sur­vey showed that the top rea­sons for re­jec­tion of home fi­nanc­ing ap­pli­ca­tions are ap­pli­cants hav­ing a high debt ser­vice ra­tio; an ad­verse credit his­tory; in­suf­fi­cient in­come; and weak doc­u­men­ta­tion/bank­ing records to sup­port the ap­pli­ca­tion.

Gen­er­ally, an eval­u­a­tion of any ap­pli­ca­tion for fi­nanc­ing would be based on how an ap­pli­cant match up to a set of cri­te­ria en­com­pass­ing five broad ar­eas namely – char­ac­ter, ca­pac­ity, col­lat­eral, con­di­tions, and cap­i­tal. Loan ten­ure of 40 years

300,000 4.65 1,377.75 661,320.16 Dif­fer­ence

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