‘Higher with­drawals will fuel hous­ing bub­ble risk’

> EPF-en­dorsed end-fi­nanc­ing scheme will be lim­ited to PR1MA homes, first-time buy­ers

The Sun (Malaysia) - - SPEAK UP - BY LEE WENG KHUEN

KUALA LUMPUR: The Em­ploy­ees Prov­i­dent Fund (EPF) yes­ter­day cau­tioned that higher with­drawals from the pen­sion fund could cre­ate a hous­ing bub­ble risk.

“While it is okay to open up a bit (with­drawal) to al­low first house pur­chase, if you open it up too much, it will fuel the hous­ing bub­ble where you en­cour­age peo­ple to buy as­sets that they may not be able to af­ford,” the fund’s CEO, Datuk Shahril Ridza Ridzuan, said.

Hence, he said, the newly pro­posed end-fi­nanc­ing scheme will only be avail­able for 1Malaysia Peo­ple’s Hous­ing (PR1MA) homes, which are priced be­low RM300,000 each. It is strictly for first-time house buy­ers only.

“We’re in the midst of fi­nal­is­ing the scheme, “he said, not­ing that it will be im­ple­mented on Jan 1, 2017.

Un­der the scheme, Shahril said, the banks will lend more money judg­ing from the fu­ture in­come that will be go­ing into bor­row­ers’ EPF Ac­count 2.

“Those who in­tend to come for this scheme in 2017 must make sure they are aware that they are trad­ing off longterm abil­ity to draw down Ac­count 2 for short-term abil­ity to buy a house.”

For ex­am­ple, an ap­pli­cant with a monthly in­come of RM3,000 will be el­i­gi­ble for a loan of only about RM187,000. How­ever, through the spe­cial scheme, the ap­pli­cant will be able to bor­row more than RM295,000.

Upon choos­ing the fa­cil­ity, all other pre-re­tire­ment with­drawals un­der Ac­count 2, namely med­i­cal, ed­u­ca­tion, Age 50 and Hajj with­drawals, will no longer avail­able un­til the PR1MA loan is fully set­tled.

Com­ment­ing on the pos­si­bil­ity of higher in­ter­est rates charged for the end-fi­nanc­ing scheme, Shahril said it will de­pend on the banks.

“There are four banks (May­bank, CIMB, RHB and AmBank) work­ing on the scheme. Ba­si­cally it’s up to the banks to make the of­fer. Again, it will be based on their credit as­sess­ment. If you have a strong credit, then you should get a bet­ter rate,” Shahril said.

In the event of a loan de­fault, he opined that the Ac­count 2 money will be utilised even­tu­ally even though it can­not be used un­til the loan is set­tled. “The bank has to fore­close on the house first. For Ac­count 2, when we say ring fence, it’s not a charge on Ac­count 2 to force the mem­bers to take out their money. (But) the mem­ber will def­i­nitely use the money to avoid bank­ruptcy.”

Shahril said there is no plan at the mo­ment to ex­tend the end-fi­nanc­ing scheme to other af­ford­able hous­ing schemes, such as Rumah Se­lan­gorku.

“PR1MA is a na­tion­wide hous­ing scheme. So I think it is suf­fi­cient to cater to the mar­ket,” he added.

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