Press Statement By Penang Chief Minister Lim Guan Eng In Penang On 12.4.2014.
Bank Negara Should Reinstate Developer Interest Bearing Scheme(DIBS) To First-Time Buyers As Well As Increase And Extend Syarikat Jaminan Kredit Perumahan(SJKP) To Buyers Of Affordable Homes Costing From RM72,500 Up To RM 400,000.
The Penang state government urges Bank Negara to reinstate Developer Interest Bearing Scheme(DIBS) for first-time buyers as well as increase and extend Syarikat Jaminan Kredit Perumahan(SJKP) to buyers of affordable homes costing from RM72,500 up to RM400,000. Ever since DIBS was abolished, many first-time buyers of affordable housing could not obtain bank loans to buy their own homes.
Up to 70% of the housing loan applications, including low-cost and low-medium cost(LC/LMC), have been rejected by private banks. Bank Negara should reinstate the Developer Interest Bearing Scheme(DIBS) for first-time buyers to enable them to realise their dream of owning their own homes. Legal fees should be part of the DIBS package and stamp duty should be waived to lower the initial entry cost for first time home buyers.
At the same time, the funding for Syarikat Jaminan Kredit Perumahan(SJKP) should be increased to RM3 billion to include not only guaranteeing LC/LMC loans by private banks but also for loans from first-time buyers of affordable housing costing up to RM400,000. With the present small sum of RM180 million of SJKP loan guarantees approved nation-wide only for LC/LMCs, there is not enough to go around nationally(see graph below).
Presently SJKP guarantees a maximum loan of RM 120,000, which is insufficient for affordable homes costing up to RM400,000. Interest rates for LC/LMC and first time buyers of affordable housing should be fixed at Base Lending Rate or BLR if the Bank Negara is sincere in helping them. It is sad that high-end loans for expensive luxury houses get lower interest rates than LC/LMC and affordable housing loans.
The latest Bank Negara Annual Report 2013 has revealed that Bank Negara is being short-sighted and uncaring at best or irresponsible and unprofessional at worst towards the problem of Malaysia having the second highest level of household debt in Asia. Bank Negara dismissed the rise in the level of household debt in Malaysia from 81.1% of Gross Domestic Product(GDP) in 2012 to 86.8% of GDP in 2013 as not posing any risk to financial stability.
Bank Negara should realise that the reason for is that our income levels are stuck in a “glacial trap” with inflation outpacing wage rises. This has forced many households to rely on credit loans to make ends meet and even resort to loan sharks when they are unable to get loans from financial institutions.
With total household borrowings at RM854.3 billion in 2013, the proportion of households having loans with those having monthly earnings of up to RM3,000, accounted for 27% of total household borrowings at RM 230.l7 billion. This only proves that for lower income groups, their incomes are unable to keep up with inflation, forcing many to borrow to survive to maintain their living standard, forget about getting housing loans to purchase their own homes.
How can first-time buyers from lower-income groups afford to buy their own homes when Bank Negara has reduced the maximum tenure for loans of property purchases from 45 years to 35 years? Such reduction in tenure will only increase the housing installment payments and make it more difficult for lower-income groups to qualify for loans.
The Penang state government is taking pro-active steps on its own initiative to assist low-income buyers unable to get loans by introducing the Shared Ownership Scheme(SOS) for low-cost houses, a first in the country. Many lower-income groups are able to qualify for loans if they need to borrow only 70% of the property price.
Under the SOS, the property is jointly owned by the state government with the state government giving out loans of up to 30% of the property price interest-free. With this 30% interest-free housing loan from the state government, the buyer of low-cost home needs to only borrow 70% of the property price, which most of them can qualify.
LIM GUAN ENG
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