In­ter­est rates, loan re­jec­tions in spot­light

> Min­istry hosts meet­ing with in­dus­try stake­hold­ers to ob­tain feed­back on de­vel­oper loans pro­posal

The Sun (Malaysia) - - SPEAK UP - BY EVA YEONG

PETALING JAYA: In­ter­est rates, loan re­jec­tions and con­flict of in­ter­est were some of the is­sues brought up at a meet­ing hosted by the Ur­ban Well­be­ing, Hous­ing and Lo­cal Govern­ment Min­istry yes­ter­day.

The meet­ing was held to ob­tain feed­back from in­dus­try stake­hold­ers on the min­istry’s de­ci­sion to al­low prop­erty de­vel­op­ers to of­fer loans to house buy­ers.

It is un­der­stood that the Real Es­tate and Hous­ing De­vel­op­ers’ As­so­ci­a­tion Malaysia (Re­hda), Na­tional House Buy­ers As­so­ci­a­tion, As­so­ci­a­tion of Banks Malaysia and Malaysian Li­censed Money Lenders As­so­ci­a­tion at­tended the 1 -hour long meet­ing.

The in­ter­est rate for such loans was one of the per­ti­nent points of dis­cus­sion. Although Ur­ban Well­be­ing, Hous­ing and Lo­cal Govern­ment Min­is­ter Tan Sri Noh Omar has said the in­ter­est rate should be capped at 6% a year, con­cerns were raised as prop­erty de­vel­op­ers’ fi­nance costs alone can come up to that fig­ure.

Re­hda has said that they are propos­ing a 2% plus fi­nance costs in the form of in­ter­est rates.

It is un­der­stood that prop­erty de­vel­op­ers who al­ready have mon­eylend­ing li­cences are of­fer­ing loans at an in­ter­est rate of 8% a year.

Another is­sue brought up was that prop­erty de­vel­op­ers would only be able to of­fer loans with­out col­lat­eral as it would be likely that the prop­er­ties owned by would-be bor­row­ers are al­ready in the hands of banks. Loans with­out col­lat­eral are likely to be at higher in­ter­est rates.

Other is­sues high­lighted in­clude loan re­jec­tion rates as well as the risk of de­fault and fore­clo­sures. Ques­tions were also raised about bor­row­ers’ abil­ity to ser­vice two loans; one from the bank and one from the de­vel­oper.

The meet­ing was ad­journed for the min­istry to de­lib­er­ate on is­sues raised. No time­line was given for a de­ci­sion.

Last week, Re­hda pres­i­dent Datuk Seri Fateh Iskan­dar Mo­hamed Man­sor, who sup­ports the scheme, said that end­fi­nanc­ing and loan re­jec­tion are the top rea­sons for un­sold prop­er­ties in Malaysia.

Fateh, who stressed that only prop­erty de­vel­op­ers with strong bal­ance sheets would of­fer such loans, said the in­ter­est rates “will not be in the teens” and pro­posed to cap it at 2% on top of fi­nance cost.

He also said the loans should only be to bridge the short­fall in mar­gin of fi­nanc­ing of­fered by banks, to be of­fered to first-time house buy­ers and up­graders.

Prop­erty de­vel­op­ers who in­tend to of­fer such loans would have to ap­ply for a mon­eylend­ing li­cence un­der the Money­len­ders Act 1951, which is un­der the purview of the Ur­ban Well­be­ing, Hous­ing and Lo­cal Govern­ment Min­istry.

The scheme was an­nounced ear­lier this month and pre­sented to the Cabi­net last week, which in­structed the min­istry to fine-tune it.

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