Credit access not the problem confronting homebuyers but affordability, says Bank NegaraBy Chen Shaua Fui / theedgemarkets.com | July 20, 2016 : 8:06 PM MYT
KUALA LUMPUR (July 20): Credit access is not the problem confronting potential homebuyers, but rather more fundamental issues like affordability and shortage of supply of reasonably priced houses, says Bank Negara Malaysia (BNM).
In a statement today, the central bank stressed that first-time homeowners continue to have access to financing, as outstanding housing loans continue to expand at double-digit levels, recording a growth of 10.6% as at end-May 2016.
About 75% of borrowers or 1.5 million people who have housing loans are first-time homebuyers, it added.
"We wish to state that access to credit is not the problem confronting potential buyers in owning affordable houses. There are more fundamental issues that require resolution such as affordability and shortage of supply of reasonably priced houses," said BNM.
BNM said this in response to recent media articles on requests to review its lending guidelines.
Yesterday (July 19), Selangor Menteri Besar Datuk Seri Azmin Ali urged the central bank to look at measures to help potential fist-time homebuyers acquire properties to increase home ownership, as the state government had received many complaints about the difficulty of securing housing loans.
Meanwhile, BNM said responsible financing guidelines by the central bank serve to ensure that individuals borrow within their capacity to repay the borrowings.
"It places a responsibility on banks to establish a borrower's income that will be available to meet debt repayments, after allowing for expenditures and contingencies.
"This is to protect and prevent individuals from falling into financial hardship due to over borrowing, which ultimately undermines home ownership as a result of foreclosures," it added.
BNM, it highlighted, does not prescribe any lending limits, and lending decisions continue to be determined by a bank's business decision, reflecting its risk appetite and strategies.
"As a general rule, all applicants who fulfill the credit criteria and can afford to repay the debt will have access to credit," it added.
"The Bank, Agensi Kaunseling dan Pengurusan Kredit (AKPK) and the Association of Banks in Malaysia (ABM) continue to engage with state authorities to improve the process for approving applicants for affordable homes to ensure that they will also be eligible for bank financing. This includes helping individuals identify the steps that they can take to improve their eligibility for financing," it added.
Separately, ABM issued a statement to stress that commercial banks have been offering housing loans to applicants who are eligible.
It said banks consider many different factors when screening housing loan applications, while adhering to their respective risk appetites and/or the guidelines set by the regulators.
"Consumers who are eligible will continue to be able to obtain financing," it said.
The association, representing 27 commercial banks that currently operate in Malaysia, said those who wish to secure a housing loan should pay close attention to factors like having a good credit record, and fully and accurately disclose all material information with regard to their financial position.
"The borrower may also want to consider getting pre-approved for a housing loan before looking at purchasing a property. In assessing your eligibility for a housing loan, monthly home loan instalments and other long-term monetary commitments such as hire purchase loans should not exceed more than 40% of gross monthly income.
"Housing loan applicants should work with their financiers when making the suitability and affordability assessments for any facility applied for to pave the way for more robust financial management on the part of consumers. Our member banks are committed to playing their role in this process," ABM added.
It also recommended first-time homebuyers to consider applying for Government schemes such as "Skim Rumah Pertamaku (SRP)" for assistance in their property purchase.
Eleven commercial banks and eleven Islamic financial institutions in Malaysia are participating in the SRP, it added.
Those who may have enquiries or complaints related to housing loan matters can contact ABM at 1-300-88-9980.
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