In a Malaysiakini report, the Umno lawmaker commented on the announcement by Urban Wellbeing, Housing and Local Government Minister Noh Omar that housing developers would be given moneylending licences to provide loans to house buyers who faced difficulty in securing loans from banks.
Johari pointed out that housing developers needed to secure a bank loan themselves before starting a new project.
“Tell me, which developer in Malaysia is able to build a house and sell it after completion?
“No. All developers have to sell houses based on progress, because they have no money,” he was quoted as saying.
Thus, he said the idea of developers borrowing money to complete a project while giving loans to house buyers seemed like an unsustainable business model.
Johari also questioned how buyers who could not get bank loans at a six per cent interest rate would be able to service a loan with an 18 per cent interest rate, as proposed under the new loan scheme.
Yesterday, in making the announcement, Noh Omar explained that the interest rate for the loans issued by developers will be capped at 12 per cent a year for borrowers with collateral and 18 per cent for those without.
Saying it did not sound logical, Johari said the public must be informed so that they will not be trapped into borrowing without knowing for sure if they were able to pay back the loans.
The Umno Supreme Council member also refuted the notion that the problem of securing loans stemmed from the refusal of banks to provide loans.
“They (the applicants) do not have enough income to buy the house as the house price is a mismatch to their income.”
He added that moneylenders faced higher risks compared with banks as they could not collect deposits and the money they lent was at their own risk.
Following yesterday’s announcement, consumer groups have urged the government to review the decision to allow developers to provide loans, fearing a dire lack of protection for consumers.