October 19, 2012
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| The Minister told banks to be less strict in implementing BNM's lending rules. |
KUALA LUMPUR, Oct 19 ― Banks should be more lenient with first-time homeowners to help cope with rising property costs, said Datuk Chor Chee Heung today following a dip in loan approvals since Bank Negara Malaysia’s responsible lending guidelines.
The housing and local government minister also said that recent changes to make it easier for low-income households to qualify for their first mortgage will not pose a danger to the financial system.
“Hopefully banks will help genuine first home buyers and not speculators,” he said at the opening of the Malaysia Property Expo here. “Hope you can consider rather than say, ‘we are bound by Bank Negara’.”
The home loan approval rate has dipped nearly seven percentage points in the first half of the year, falling to 46.8 per cent from 50.1 per cent during the same period last year, after Bank Negara introduced stricter lending rules that went into effect in January.
The new guidelines include calculating loans eligibility based on net rather than gross income and aimed to increase prudent lending and avert the risk of property asset bubbles.
Research house HwangDBS Vickers estimated that for a 30-year loan on a RM500,0000 property, the lower margin of financing would set a borrower back by an additional RM360 per month, or nine per cent of average household income, on top of the two to three times higher down payment.
Chor said later in a press conference that, following the prudent lending guidelines, some banks had gone overboard and were refusing to lend.
“I urge banks to be more considerate,” he said. “You can be prudent, yes, but do more intelligence work. If a purchaser can [comfortably] repay, give them a loan.”
He also said that the revisions to the first home ownership scheme contained in the 2013 Budget that waived the requirement for three months of savings in instalments, would not pose a major fiscal risk.
“This is a risk the government took to encourage ownership among the rakyat,” he said. “It won’t pose a danger to the government.”
Observers had previously said that loosening the lending requirements in the first home ownership scheme could lead to a surge in unqualified home buyers and threaten the integrity of the financial system.
Chor said that the government was “struggling very hard” to ensure all Malaysians would be able to afford to either buy or rent a house.
He also said that the government was considering absorbing some of the cost of infrastructure and utilities in new developments under the PR1MA affordable housing programme, which could bring down costs to purchasers by as much as 10-15 per cent.
“If government can defray some of the costs of the utilities and infrastructure, the end result will be the final prices of houses will be cheaper,” he said.
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