Banks should not simply lend and neither should buyers simply buy The fact is some of you prefer to spend your money on things other than property.
This financial outlook is perfectly fine. The problem arises if you are encouraged to buy a property but you do not qualify for it.
The underlying issue here will always be your monthly salary followed by the property price and subsequently the loan approval conditions.
The developers can fix any selling price they want, as long as the buyer qualifies for the loan. If they do not, their competitors should make their houses more affordable.
Another way to help those who truly need home financing is through government intervention. The good news is that this assistance is coming soon.
The Ministry of Housing and Local Government recently said that they are looking at six different housing schemes with 15 banks and financial institutions on board.
The ministry has asked the relevant banks to relax some of their requirements to fund housing projects, with the government promising to deliver one million affordable homes for Malaysians by 2028.
Developers have switched their focus from building expensive high-end homes to affordable homes. Therefore, the government needs the banks’ support in order to reach their target to build 1 million affordable homes in 10 years.
The demand for affordable homes is only going to increase and subsequently banks will be more willing to assist developers fund their projects.
Cagamas guarantees up to the first 20% of the financing on a ‘first-loss’ basis. Cagamas Berhad, the national mortgage corporation of Malaysia was established in 1986 to promote more home ownership and grow the secondary mortgage market.
Cagamas issues corporate bonds and sukuk to finance the purchase of housing loans and receivables from financial institutions, selected corporations and the public sector.
Similarly the revised Skim Rumah Pertamaku scheme allows you to borrow up to 110% if you are buying a house below RM300,000 and have an individual or household monthly income of no more than RM10,000.
The age cap is removed as well, as long as it is your first home purchase. Thus far,7,000 applicants have been approved in 2019 while 8,000 cases were approved last year.
It will be interesting to see what is announced in the national budget speech in October 2019. The government has to be careful not to encourage any deterioration in loan borrower quality.
It is best that the property market in Malaysia grows at a measured pace and continues to educate buyers that savings are vital if you intend to buy a property. Happy understanding.
This article first appeared in kopiandproperty.com
Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.